NEW YORK CITY BONDS WELL RECEIVED BY INVESTORS
Mayor Rudolph W. Giuliani and Comptroller Alan G. Hevesi today announced the results of a sale of approximately $1,072 billion of New York City General Obligation Bonds. Smith Barney Inc. served as book-running senior manager on approximately $900 million of tax-exempt bonds with Bear, Stearns & Co., Lehman Brothers, Merrill Lynch & Co., Prudential Securities serving as co-senior managers. Goldman Sachs International was book-running senior manager on $50 million of Floating Rate Euronotes sold out of London with Bear,Stearns International Limited, Citibank International plc, J.P. Morgan Securities Ltd., Lehman Brothers, Merrill Lynch International and Morgan Stanley & Co. International serving as co-senior managers. An additional $122 million of fixed rate taxable municipal bonds were sold by advertised competitive bidding and were awarded to Morgan Stanley & Co. bidding alone, one of ten bids submitted.$722 million of the bonds, including the $120 million of competitively sold taxable City bonds, will be used to fund a portion of the City's on-going capital program. The other $350 million, including the $50 million of taxable Floating Rate Euronotes, was a refunding of previously issued City debt. The refunding portion of the financing resulted in present value savings of approximately $16 million, or 4.9 percent of the amount of refunded bonds, and produced $18 million of budget relief for the City in FY 1998 without producing budget dissavings in any subsequent year.
The tax exempt portion of the City bonds received strong interest from both retail and institutional investors. $304 million of orders were received during a two day retail pre-sale order period which ended at noon on Tuesday, the fourth highest in amount among the thirteen City retail presale periods. The $50 million taxable Floating Rate Euronotes were priced at the same spread over LIBOR, plus 28 basis points, as the City's Euronotes sold in January, despite an erosion of several basis points in the taxable markets since January.
"The increasing support of investors is gratifying," said Mayor Giuliani. "The fact that the trading value of New York City paper has improved over the past year and one-half compared to the overall municipal market indicates that investors have an increasing recognition of the City's improving economic and financial prospects."
"We are pleased that this financing, a portion of which is intended to replace the pay-as-you-go capital in the City's current budget, has been so successful," Comptroller Hevesi said. "It is good news that this was the fourth largest retail order period in the City's experience and that the Euronotes were placed with an increasingly diverse group of European investors."
The City has announced that it will be returning to the market twice with tax-exempt bonds before June 30, with a refunding of approximately $875 million, market conditions permitting, and with a competitive sale of approximately $200-300 million.
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