After receiving a rating upgrade, the State of New York Municipal Bond Bank Agency sold $280 million of revenue refunding bonds on Monday, a day ahead of schedule.

The agency was created in 1972 to help New York municipalities gain access to the capital markets.

Proceeds of the bond sale will advance refund select maturities of the agency's 2003 Series C revenue bonds.

J.P. Morgan is lead underwriter and Hawkins Delafield & Wood LLP is bond counsel.

Ahead of the sale, Standard & Poor's upgraded the agency's rating to AA-minus from A-plus, and assigned a positive outlook.

"The upgrade reflects what we view as the strength of the intercept of annually appropriated New York City state education aid in advance of debt service payment," said credit analyst David Hitchcock.

The bonds are special revenue obligations of the agency, secured by annual payments that are dependent upon annual appropriations by the state.

If there is not sufficient money appropriated by the state to enable the agency to pay for the bonds on a timely basis, neither the state nor the city will be liable to the bondholders.

According to the preliminary official statement, school aid to New York City for the fiscal year 2013 is estimated to be about $8.44 billion. In fiscal 2012, the school aid totaled $8.40 billion.

"The positive outlook on the bonds reflects our recent change to a positive outlook on New York State's GO debt, and the strength of state appropriations for New York City education," analysts said.

Standard & Poor's could revise the bond rating if New York's bond rating is revised.

Fitch Ratings also assigned a AA-minus to the bonds, also based on the state's rating.

Both agencies assign double-A ratings to New York.

The revenue refunding bonds will have maturities from 2014 through 2022.

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