Variable-rate debt represents 8% of the bond portfolio of New York's Metropolitan Transportation Authority — well below its 25% threshold, said finance manager Patrick McCoy.
"The variable debt has been performing very well. It represents being able to utilize the shortest part of the yield curve for our long-term capital investments and it continues to be an important piece of the portfolio," McCoy told members of the MTA board's finance committee on April 27.
The board's policy since 2004 has been to limit the principal amount of variable-rate debt to 25% of the aggregate principal amount of all outstanding authority obligations.
According to McCoy's
Nearly half the variable debt, including synthetic fixed debt, is in floating rate notes, in which interest rates are based on a set spread to a Securities Industry and Financial Markets Association or London Interbank Offered Rate floating index. The MTA is carrying $2.4 billion in floaters, while daily and weekly variable rate demand bonds combine for nearly $2 billion. The authority also has $550 million in bond anticipation notes.
McCoy reports separately on synthetic fixed debt in October, as part of the authority's work plan.
The MTA next month intends to sell $250 million of Triborough Bridge and Tunnel Authority Series 2015A general revenue bonds, $100 million of which will retire bond anticipation notes issued last year. The balance will help finance approved capital projects.
Nixon Peabody LLP will be bond counsel with Public Financial Management Inc. the financial advisor. Loop Capital Markets is senior manager and Academy Securities is special co-senior manager.
