Archives of the Mayor's Press Office

Date: Wednesday, March 21, 2001

Release #093-01

Contact: Sunny Mindel/Curt Ritter
(212) 788-2958
  David Neustadt, Comptroller's Press Office (212) 669-2591


The City of New York announced today that it successfully priced its Fiscal 2001 Series H General Obligation bonds. The spreads to MMD triple -- A general municipal market scale were consistent with the recent strong performance of the City. The spread over the MMD was 20 basis points or less in all maturities.

"The ongoing success of the City's bond sales shows that investors continue to appreciate the strong financial management of the City during my administration," said Mayor Giuliani. "It is also a sign of investor confidence in the City's economy."

"The response to the sale reflects continued investor confidence in New York City's strong position," said Comptroller Alan Hevesi. "Both the investor and the City achieve their objectives: they get a solid credit and we get very good yields."

The tax-exempt fixed-rate new money bonds totaling $340 million were sold on a negotiated basis through the City's underwriting syndicate led by book-running senior manager Goldman, Sachs & Co. JP Morgan and Salomon Smith Barney served as co-senior managers on the tax-exempt portion of the deal. An additional $100 million of auction rate mode tax-exempt variable rate bonds and $100 million of taxable auction rate mode variable rate bonds will be priced before the closing of the financing on March 29, 2001. An additional $25 million of fixed-rate taxable bonds with maturities in 2003 and 2004 were sold by competitive bid. Ten bids were received. The winning bid was submitted by Saloman Smith Barney at a true interest cost of 4.986983%.

The sale was preceded by a two-day retail order period that opened on Monday, March 19 and concluded on Tuesday afternoon, March 20. The $68 million of retail pre-sale orders totaled approximately 20% of the tax-exempt bonds offered. The bonds offered in 2004 were completely pre-sold during the retail order period.

Institutional demand for the fixed-rate tax-exempt bonds was strong and broad based. The approximately $320 million of bonds offered to institutions, net of $20 million of retentions allocated to managers, were oversubscribed by 1.25 times by the approximately $400 million of priority orders from institutions, particularly in the maturities from 2011 through 2018. There were an additional $472 million of member orders submitted by securities firms in the syndicate. Yields (interest rates) ranged from 3.45% in the 2004 maturity to 5.05% in the 2018 maturity.

The spread of interest rates on various maturities compared to the widely cited MMD Tripe -- ssA scale was consistent with recent City bond sales. In the February sale, interest rates in most maturities were 12-to-20 basis points over the MMD scale. In today's sale, interest rates ranged from 10-to-20 basis points over the MMD scale, with the 2004 maturity priced 4 basis points below the MMD scale.

Moody's Investors Service rates the City at A2, Standard & Poor's rates the City at A and Fitch rates the City at A+.

The proceeds of the bond sale will be used to fund the ongoing capital program of the City of New York.

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