Release #361-00

 

Contact:	Sunny Mindel / Julie Caudell (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 the first two of three components of a $587 million New York City General Obligation New Money and Refunding Bond Issue. All three major rating agencies have upgraded the City's general obligation credit over the last few weeks to the highest levels in the City's history. Interest rates in relation to general market indices improved compared with the last negotiated sale of City general obligation bonds in May.

"First the investor community and now the rating agencies agree that the City is in excellent financial health," Mayor Giuliani said. "The strong demand for our bonds is another expression of confidence by Wall Street in the City's financial management and economic policies."

"The City's finances and economy are in excellent shape for the near term; all three of our credit ratings have risen; and investors have responded by buying our bonds at interest rates that are as close to the highest rated municipalities as they have been for the last couple of years," said City Comptroller Alan Hevesi. "I'm very pleased that we're continuing to make so much progress and that we're getting the recognition we deserve."

One component of the issue was approximately $405 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. and J.P. Morgan serving as co-senior managers on this portion of the sale. Interest rates on the fixed rate tax exempt City bonds ranged from 4.2% on the 2001 maturity to 5.56% on the 2021 maturity. Orders from retail investors totaled $141 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 through 2006 and in 2020 and 2021. The spread of interest rates on various maturities compared to the widely cited MMD Tripe-A scale improved compared with the last G.O. sale in May. In the May sale, interest rates in most uninsured maturities were 30 - 35 basis points higher than the MMD scale. Today, most G.O. yields were less than 25 basis points over the MMD scale.

Another component of the issue was the sale of $85.84 million of taxable fixed-rate bonds, sold by advertised bids. Of the seven bids received, the winning bidder was Morgan Stanley Dean Witter, with a true-interest-cost (TIC) of 7.12% on the taxable fixed rate bonds offered. The final component of this sale is $100 million of auction rate variable rate bonds, to be priced by Salomon Smith Barney just before the close of deal on October 10.

$525 million of the bonds sold will be used to finance the ongoing capital program of the City. The remaining approximately $62 million is a refunding of previously issued City debt, which resulted in present value savings of over 5% of the total refunding bonds issued.

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