May 13, 2020 – New York City’s premier credit – the AAA-rated Transitional Finance Authority (TFA) – received a warm reception by municipal bond investors on Tuesday, selling $1.1 billion bonds – $850 million exempts and roughly $260 million taxables.

In a press release, TFA, the City’s Budget Office and the Comptroller’s office said:

During a one-day retail order period for the tax-exempt bonds, TFA received $553 million of orders from individual investors, out of which approximately $324 million was usable. During the institutional order period, TFA received approximately $5.7 billion of priority orders, representing 11x the bonds offered for sale to institutional investors.

Given strong investor demand during the institutional order period, yields were reduced by 3 – 5 basis points for maturities in 2031 through 2035, 15 basis points for maturities in 2036 through 2040, 8 basis points for the 2041 maturity and 10 basis points for the 2045 maturity. Final stated yields ranged from 0.76% in 2022 to 2.77% in 2045 for the 4% coupon and 3.056% in 2046 for the 3% coupon.

The TFA was first established in 1997, when New York City’s credit ratings were much lower than levels today.

TFA bonds are highly rated as they are secured by city personal income taxes collected by New York State and transferred to bondholders’ trustee before being remitted to the city.

If city personal income taxes are insufficient to pay bondholders, city sales taxes are also available to repay debt service.

Contact Jumanne Johnson at JJohnson@buymuni.com.