As investors navigate through the $12 billion new-issue calendar for this week, a significant portion of the debt available comes from New York City. With a deal size of $1.8 billion, this offering is the largest on the calendar and follows the city’s $1.2 billion refunding issuance in July.
The New York City debt offering consists of two series. The first series, totaling $1.5 billion, comprises tax-exempt General Obligation Bonds (GOs) with maturity dates ranging from 2026 to 2052. The second series, amounting to $300 million, consists of taxable GOs with maturity dates from 2032 to 2037, which will be sold through a competitive bidding process.
Loop Capital Markets will serve as the bookrunning senior manager for this deal, with 25 firms acting as co-managers. Public Resources Advisory Group and Frasca and Associates are co-municipal advisors, while Norton Rose Fulbright and Bryant Rabino are the deal’s co-counsel.
Patrick Luby, head of municipal strategy at CreditSights, anticipates strong demand for the new tax-exempt bonds, driven by the $7.6 billion of redeemed bond principal returning to investors from New York issuers. However, Luby cautions that the pace of redemptions is expected to slow down significantly in September, potentially impacting bond spreads.
New York City’s GOs are rated Aa2 by Moody’s Ratings, AA by S&P Global Ratings, AA by Fitch Ratings, and AA-plus by Kroll Bond Rating Agency. Fitch’s rating report highlights the city’s strong budget monitoring and controls, along with its revenue and expenditure management. While the city faces challenges with its long-term liability burden, Fitch expects that reserves will be maintained at satisfactory levels.
In September, investors can look forward to additional debt issuances from New York City. The NYC Transitional Finance Authority is set to price a $1.8 billion deal in the week of Sept. 9, followed by a $1.3 billion Empire State Development Corporation deal in the week of Sept. 16. Additionally, the New York State Environmental Facilities Corp. is expected to price $218.84 million of green state revolving funds revenue bonds Series 2024 B on Tuesday.
The New York City debt issuance presents an opportunity for investors to participate in a significant municipal bond offering. With strong ratings and market demand, the city’s GOs continue to attract investor interest. As the municipal bond market evolves, New York issuers play a key role, offering a variety of investment options for bond buyers.