New York State, Philadelphia pleased with their recent bond sale results

Officials in New York and Pennsylvania expressed their satisfaction with bond sales recently brought to market.

New York State Comptroller Thomas DiNapoli said the state sold $572.72 million of general obligation bonds on Sept. 27 that received orders of $1.6 billion, or 2.8 times oversubscribed after a one-day retail order period and institutional pricing.

The strong demand allowed senior book-running manager BofA Securities to cut yields in many maturities, according to the comptroller.

DiNapoli said retail orders supported more than 55% of the total issuance, of which 85% came from state buyers. The true interest cost on the GOs was 3.99%.

“I am very pleased with the sale results, which demonstrate robust demand from investors large and small for New York’s GOs,” DiNapoli said. “This buoyant demand allowed the state to reduce yields offered and hence reduce costs for taxpayers.”

The bonds were rated Aa1 by Moody’s Investors Service and AA-plus by S&P Global Ratings and Fitch Ratings.

The GOs consisted of:

• $216.04 million of Series 2023A tax-exempts, which will finance projects authorized by voter-approved bond acts including the 1972 Environmental Quality, 1996 Clean Water/Clean Air, 1965 Pure Waters, 2005 Rebuild and Renew New York Transportation and 2014 Smart Schools;
• $242.08 million of Series 2023B tax-exempts, which will finance projects authorized by the 2005 voter-approved Rebuild and Renew New York Transportation bond act;
• $104.45 million of Series 2023C tax-exempt refunding bonds, which will facilitate the tender, purchase and refunding of certain outstanding Series 2013C tax-exempt refunding bonds and Series 2021B taxable GOs; and
• $10.16 million of Series 2023D taxables, which will finance projects authorized by the voter-approved 2005 Rebuild and Renew New York Transportation bond act.

DiNapoli said the refunding will save taxpayers over $8.5 million on a present value basis, or 6.3% of the par amount of bonds refunded.
Ramirez & Co. was co-senior manager on the deal along with co-managers Loop Capital Markets, RBC Capital Markets and Siebert Williams Shank. The bonds are scheduled for delivery on Oct. 11.

BofA was lead dealer manager and Loop Capital Markets was co-dealer manager on the invitation to tender some outstanding GOs.

In Pennsylvania, Philadelphia officials said they were pleased with their sale of about $565 million of water and wastewater revenue and revenue refunding bonds on Sept. 19.

The city said it was able to take advantage of strong demand for the bonds to lock in a total borrowing cost of just over 4.50%. The bonds have a 30-year final maturity.

Roughly $1.6 billion in total orders were placed during the order period by 77 institutional and retail investors, which made the issue 2.6 times oversubscribed.

This let senior manager Goldman Sachs reduce rates by as much as 0.08% per maturity, the city said, resulting in a $1.3 million savings in debt service on the bonds compared to the pre-pricing estimates.

“The Philadelphia Water Department continues to do everything that it can to seize cost-saving opportunities including tax-exempt bonds, government subsidized-interest loans, refinancings, and state and federal grant opportunities to help minimize the burden on our rate payers and provide financial flexibility to invest in our infrastructure,” said PWD Commissioner Randy Hayman.

As part of the transaction, the city took advantage of current interest rate dynamics to refund about $107 million of outstanding water bonds. Around $72 million of the refunding bonds are non-callable, which the city said means it won’t have another opportunity to generate savings through a current refunding.

The city said the refunding achieved net present value savings of over $3.2 million, or 3.03% of refunded par, an annual savings of around $270,000 to PWD ratepayers over the next 15 years.

“We were pleased to achieve such strong results, especially in light of the recent volatile market conditions,” said Treasurer Jacqueline Dunn. “The pricing outcome reflects the strong financial management by PWD and the attractiveness of their credit.”

The bonds were rated A1 by Moody’s and A-plus by S&P and Fitch

Ramirez & Co. was co-senior manager on the deal with Acacia Financial Group and PFM Financial Advisors serving as financial advisor. The sale closed on Sept. 28.