| Contact: | 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 approximately $697 million of New York City General Obligation Refunding Bonds. After a strong pre-sale retail order period and despite repricing interest rates upwards on most maturities in the institutional pricing, the bond issue still achieved the lowest spread ever to the widely-cited MMD triple-A rated tax-exempt bond index .
"The success of today's bond sale is another demonstration of the benefit of the series of bond rating increases received by the City," said Mayor Giuliani. "It is also a sign of confidence by investors in the City's financial management."
"The interest this sale generated in the retail sector is particularly gratifying," said Comptroller Alan Hevesi. "Despite a somewhat soft institutional market today, retail buyers helped the City achieve excellent yields and save more than $36 million."
One portion of the issue was approximately $570 million in fixed rate, tax-exempt bonds sold by negotiated public sale. Salomon Smith Barney served as book-running senior manager with Goldman, Sachs & Co., J.P. Morgan, and Morgan Stanley Dean Witter serving as co-senior managers on this portion of the sale. Interest rates on the fixed rate tax exempt City bonds ranged from 3.1% on the 2001 maturity to 5.13% on the 2020 maturity. Orders from retail investors totaled $166 million of bonds during a two-day retail pre-sale order period. Approximately one-third of the tax-exempt bonds was pre-sold during the retail order period including entire maturities in the years 2002 and 2020. The large forward calendar of bond sales in New York State resulted in the need to increase the yield on most maturities in the institutional order period from 03 to 05 basis points. After the repricing, priority orders from institutions totaled approximately $225 million, or approximately 55% of the bonds offered to the market net of retail pre-sale orders and retentions. The rest of the bonds were oversubscribed by member orders from firms in the syndicate.
Even after the increase in yields, the spread of interest rates on various maturities compared to the widely cited MMD Tripe-A scale was the best ever. In the December sale, interest rates in most uninsured maturities were 20-23 basis points higher than the MMD scale. Today, yields in most maturities were 12-to-20 basis points over the MMD scale.
Another component of the refinancing was the sale of $127 million of taxable fixed-rate bonds, sold by competitive bid. Of the six bids received, the winning bidder was Salomon Smith Barney, with a true-interest-cost (TIC) of 5.38% on the taxable fixed rate bonds offered. The spreads to U.S. Treasury securities were 55 basis points over in the August 2001 maturity and 60 basis points over in the August 2001 maturity.
Overall, the refunding resulted in present value savings of approximately $36 million. The present value savings were 5.3% of the amount of bonds refunded.