Skyscrapers
New York City Transitional Finance Authority

Municipal

$950,000,000

Future Tax Secured Tax-Exempt Subordinate Bonds, FY 2023 Series A, Subseries A-1

June 29, 2022

SENIOR MANAGER

Image by Sam Mgrdichian

Proceeds of the issue will be used to finance general City capital expenditures. The transaction consisted of one series of tax-exempt fixed-rate bonds. The Bonds were structured as serial bonds that mature between 2024 and 2045 with a variety of 4%, 5% and 5.25% coupons and one term bond that matures in 2048 with a 4% coupon and sinking fund installments in 2046, 2047 and 2048

SWS assisted in preparing the investor roadshow, which received 90 views.


Structuring:

In the weeks leading up to pricing, the Siebert team closely monitored similar credits and market trends to ensure the Authority’s pricing strategy would produce order flow at all points along the curve, especially given the extreme volatility significantly affecting the municipal market. SWS analyzed an array of couponing alternatives and optimized principal amortization in conjunction with the upcoming adjustable rate Subseries A-2 and Subseries A-3 bonds, set to price on August 1, 2022. The utilization of a variety of coupons allowed the City to maximize investor reach and minimize the interest-only period of the issuance’s debt service in the first two years.


Sizing within Local Finance Law constraints to ensure annual debt service grew no more than 105% on both a standalone fixed rate basis and aggregate basis when combined with the upcoming adjustable rate bonds, Siebert was able to realize total plan year debt service of $241.8 million.


Pricing Results:

On the morning of the retail order period, the Authority, the FAs and Siebert agreed to offer all maturities except for those maturing in 2038, 2039, 2041, 2043 & 2044. All offered maturities generated order flow, with notable oversubscription levels in 2024 (3.86x), 2028 (2.66x) and 2032 (2.73x). Out of the $600.9 million of par offered during the retail order period, retail investors placed a total of $655.5 million orders (1.09x oversubscribed). The institutional order period opened with a relatively stable and quiet market tone. The same structure was used in the institutional order period as was in the retail order period, with the exception of changing the 5% coupon on the 2042 maturity to a 5.25% coupon.


The Authority received $1.96 billion in institutional priority orders, which combined with retail orders brought the overall book to $2.62 billion in orders (excluding stock orders) from 105 unique investors. At the close of the order period, the financing was 2.75x oversubscribed overall, with subscription levels ranging between 1.00x and 4.76x across all maturities. Given the market tone and high oversubscription levels going into the repricing discussion, the Authority tightened yields by between 1 and 5 basis points on all maturities between 2033 and 2048. The tightening resulted in $206.7 million dropped orders across all maturities.