NEW YORK CITY ACHIEVES REFUNDING SAVINGS AND RECEIVES STRONG INVESTOR RECEPTION
Mayor Rudolph W. Giuliani and Comptroller Alan G. Hevesi today announced the results of a sale of approximately $675 million of Fiscal 1998 Series H New York City General Obligation Refunding Bonds. The sale contained approximately $593 million in tax-exempt bonds and $82 million in taxable bonds. This is the first New York City bond issuance since Moody's upgraded the General Obligation credit of the City to A3 on February 24,1998.
Goldman Sachs & Co. served as book-running senior manager with J.P. Morgan & Co. and Salomon Smith Barney serving as co-senior managers. The financing was a refunding of previously issued City debt which resulted in present value savings of approximately $32 million, or 5.1 percent of the amount of refunded bonds and produced approximately $41 million of budget relief for the City.
"The continued strong demand by investors for New York City is gratifying," said Mayor Giuliani. "The rating increase from Moody's between the last sale and this one is the latest endorsement by Wall Street of the fundamental improvement in the City's fiscal position."
"The structure of this refunding, with $38 of the $41 million in savings in Fiscal Year 2000, represents an important step in our efforts to lower the City's future debt service costs," said City Comptroller Alan Hevesi. "I am particularly pleased that, for the first time, a City refunding has focused on achieving debt service savings more than one year in the future."
The bonds received strong interest from both retail and institutional investors. $156 million of orders were received during a one day retail pre-sale order period on Monday. This is considerably higher than the $120 million average on the first day of previous City retail order periods. Institutional investors submitted approximately $235 million of priority orders. Total orders including syndicate member orders plus retention bonds exceeded $850 million. Demand was particularly strong for approximately $24 million of capital appreciation bonds (CABs) offered in the 2007 and 2008 maturities.
Six bids were received on two maturities of taxable bonds totaling approximately $82 million which were offered by advertised competitive bidding. The winning bidder on each series was Salomon Smith Barney.
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