Contact: Sunny Mindel/Curt Ritter, Mayor's Press Office (212) 788-2958
David Neustadt, Comptroller's Press Office (212) 669-2591
Mayor Rudolph W. Giuliani and Comptroller Alan G. Hevesi today announced the results of a sale of $250 million of New York City General Obligation tax-exempt bonds by competitive bidding. In addition to accepting traditional sealed bids, the City for the first time accepted bids transmitted electronically. The proceeds of the financing will be used to fund the ongoing capital program of the City. The winning bid was submitted by Merrill Lynch & Co. with a true interest cost of 5.05475 percent.
The City accepted bids submitted electronically through two proprietary electronic bidding systems. Bidders had the alternative of submitting traditional all-or-nothing bids through either MuniAuction, Inc., an internet-based bidding company headquartered in Pittsburgh, or through Dalcomp/Parity, a division of Thomson Financial Municipals Group, headquartered in New York City. In addition, the City accepted bids on a maturity-by-maturity basis submitted through MuniAuction.
The City received six bids on an all-or-nothing basis, five submitted through Dalcomp/Parity, including the winning bid, and one all-or-none bid through MuniAuction. There were 16 bids submitted on a maturity-by-maturity basis for the 29 maturities, ranging from 2001 to 2029. There was no combined bid on a maturity-by-maturity basis, which the City was able to accept because not all of the 29 maturities received bids on this basis. There were no bids submitted by means of sealed bids; all bids were transmitted to the City electronically.
The City's borrowing costs in the various maturities remained at record lows compared to the widely-used Municipal Market Data (MMD) yield curve published by the Bond Buyer. In the twenty-year maturity, the reoffer yield on the winning bid was 14 basis points higher than the comparable MMD yields. This was a significant improvement compared to the City's last general obligation borrowing in February, which sold on a negotiated basis. In the February City bond sale, the twenty-year maturity was 23 basis points over the MMD curve.
"I am extremely gratified by the large number of bids submitted by securities firms for New York City's bonds during this state-of-the-art competitive bond sale," said Mayor Rudolph W. Giuliani. "The confidence which securities firms and investors continue to demonstrate in the fiscal and economic policies of the City allows the City to continue to fund its capital program at record low interest rates."
"We're very pleased to be able to use this new technology and to take our competitive bids to a new level by allowing for maturity-by-maturity bids," said Alan Hevesi, Comptroller of the City of New York. "This combination of maturity-by-maturity and all-or-nothing bidding can only help expand access to our bonds and lower our cost of borrowing."