The New York City Transitional Finance Authority (TFA) issued $1.8 billion in bonds to finance general capital expenditures.
The authority sold $1.5 billion in tax-exempt bonds and $300 million in taxable bonds. The tax-exempt bonds mature between 2026 and 2052, yielding between 2.91% and 4.25%. The taxable bonds mature between 2030 and 2036, paying interest at rates between 4.83% and 5.11%. The securities received a rating of AAA from Fitch Ratings, Aa1 from Moody’s Investors Service, and AAA from S&P Global Ratings.
The rating reflects “solid long-term growth prospects for pledged revenues and the bonds’ highly resilient structure,” Fitch analysts wrote.
Investors responded to the issuance with strong demand. TFA received 2.6 times as many orders for the tax-exempt bonds than it offered, according to the city comptroller’s office. As a result, the authority reduced the yields on certain bonds.
TFA will use the bond proceeds to fund capital projects included in New York City’s $165 billion capital improvement plan. About four-fifths of the funding for those projects will come in the form of bonds, issued by TFA and by the city itself.
The New York State legislature created the TFA in 1997 as a public benefit corporation tasked with financing New York City’s capital improvement plans.
The bonds are secured by personal income taxes and sales and use taxes.
RBC Capital Markets, LLC served as lead underwriter on the issuance of tax-exempt bonds. J.P. Morgan Securities LLC won a competitive bid for the taxable bonds. Public Resources Advisory Group, Inc and Frasca & Associates, LLC acted as financial advisors.