Contact: Colleen Roche (212) 788-2958, Deirdra L. Picou (212) 788-2971
Leah C. Johnson (212) 669-3747 (Comptroller's Office)
Goldman Sachs & Co. served as book-running senior manager on both the European financing and on the sale of approximately $808 million tax-exempt bonds and approximately $9 million of taxable bonds sold domestically in the United States. Bear Stearns & Co., Citibank International plc, Lehman Brothers, Merrill Lynch & Co., Prudential Securities and Smith Barney Inc. were also senior managers on the U.S. portion of the financing. Bear Stearns & Co., Lehman Brothers, Merrill Lynch & Co., J.P. Morgan & Co. and Morgan Stanley and Co. were co-managers on the European underwriting.
The City was able to achieve its refunding objectives in the financing. The refinancing, which resulted in present value savings of approximately 6 percent of the amount of bonds refunded, produced $75 million of budget relief for the City. No budget dissavings were produced in any year.
"The strong reception by investors, which allowed us to increase the size of the refunding by over $250 million this week, is another strong indication that the investor community recognizes and appreciates the steps we have taken to improve the fiscal and economic position of the City, " said Mayor Giuliani.
The portion of the bond issue offered in Europe received strong demand, particularly from European, Japanese and Canadian commercial banks with money management operations based in Europe. The final pricing on the floating rate Euronotes of 28 basis points (28/100ths of 1 percent) over the 3 month London Interbank Offering Rate (LIBOR) was at the low end of the range at which the bonds were offered by the underwriters in London. The management group reported strong demand in response to City presentations to investors in Europe last week. Orders exceeded the $300 million of bonds offered.
"This innovative and cost-saving deal came about because we encouraged underwriters to compete with one another in coming up with new financing proposals," Comptroller Hevesi said. "Goldman is not one of the City's senior managers, but the firm got to lead the deal because it presented the best idea for financing. And the taxable portion of this deal has achieved a narrower all-in spread to treasuries than any other equivalent financing done in many years."
The City's $808 million of tax-exempt bonds received a strong and favorable reception from all segments of the municipal market. Priority orders from large institutions totaled approximately $570 million. In this financing, the City continued its practice of having a special pre-sale order period for individual retail orders. $237 million of retail orders were received during the two and one-half day retail pre-sale period.