A two-day retail order period will begin Tuesday for the New York City Transitional Finance Authority’s $850 million sale of building aid revenue bonds.
State building aid payable to the city secures the BARBs under the School Financing Act, which the New York State Legislature approved in 2006.
According to the preliminary official statement for the sale, state building aid for the city totaled $894.5 million in 2011. Projects eligible for the aid must be included in the New York City School Construction Authority’s five-year plan. The city, acting through the SCA, submits projects from the five-year plan to the state Education Department for review and approval on a project-by-project basis.
Book-running senior manager JPMorgan will lead the new-money institutional sale of the fiscal 2013 Series S-1 tax-exempt bonds, scheduled for Thursday. Barclays Capital, Bank of America Merrill Lynch, Citigroup, Goldman Sachs & Co. and Morgan Stanley are co-senior managers.
Fulbright & Jaworski LLP is bond counsel, with the city’s corporation counsel also advising. Winston & Strawn LLP is representing the underwriters.
Moody’s Investors Service rates the bonds Aa3, while Standard & Poor’s and Fitch Ratings assign an equivalent AA-minus. S&P analysts cited strong bond provisions and the stability of building aid flowing to the city.
“While existing building aid pledged to the bonds provides solid [debt service coverage], the significant capital program for New York City schools should ensure a steady flow of additional building aid to the city,” S&P said in a December report, when TFA sold $560 million of BARBs.
The TFA, founded in 1997 is to fund a portion of the city’s capital program and forward its finance program, sold $1 billion in June and $900 million in April, both sales involving future tax-secured fixed-rate new money subordinate bonds.
State Comptroller Thomas DiNapoli’s office also intends to sell up to $850 million of fixed-rate bonds in August.