The New York City Transitional Finance Authority plans to make an impact on the municipal market this month with $1.8 billion of bond sales.
The authority's plans, according to an online investor presentation, consist of $1.5 billion of multi-modal bonds in the fixed-rate mode, as Fiscal 2025 Series H, Subseries, H-1, along with $300 million of adjustable-rate bonds in Subseries H-2 and H-3.
The bonds are secured by the city's personal income tax revenues, with a backup pledge of sales tax revenue. It's a subordinate lien, but there are no senior-lien obligations outstanding, according to the preliminary official statement.
The authority carries underlying long-term ratings of AAA from S&P Global Ratings and Fitch Ratings and Aa1 from Moody's Ratings.
The TFA was created under state law in 1997 as a bankruptcy-remote public benefit corporation to finance a portion of the city's capital investment program.
Its direct claim on city PIT revenue and sales tax backup gives it higher ratings than New York City general obligation bonds.
"A very strong legal structure insulates bondholders from the operating risk of New York City," Fitch said in February in connection with the TFA's last bond sale. Fitch rates New York City GOs AA. "Fitch anticipates the bond structure can withstand changes in economic cycles and maintain solid debt service coverage."
Moody's rates the TFA one notch above its GO rating on the city, citing the PIT and sales tax pledges "and a very strong legal structure that insulates TFA from potential city fiscal stress, both key strengths that allow TFA's future tax secured bond rating to exceed the city's issuer rating."
Since its inception, state lawmakers have steadily increased the TFA's debt limit, most recently in 2024. It now permits the TFA to have outstanding $21.5 billion of future tax secured bonds, with the limit increasing to $27.5 billion as of July 1.
In 2022, City Comptroller Brad Lander criticized Mayor Eric Adams for asking the state
The TFA is a frequent visitor to the municipal market, most recently in February
It was the nation's largest municipal bond issuer in 2024,
The fixed-rate deal will be led by book-running lead manager Wells Fargo Securities, with BofA Securities, Jefferies, J.P. Morgan, Loop Capital Markets, Ramirez & Co., RBC Capital Markets, and Siebert Williams Shank as co-senior managers, according
Retail investors will have priority in placing orders for the fixed-rate bonds during a one-day retail order period March 11, followed by institutional pricing March 12.
Bonds maturing after Nov. 1, 2034, are subject to mandatory tender or optional redemption at par on or after May 1, 2035, according to the POS. Bonds maturing prior to that are subject to make-whole optional redemption or mandatory tender.
The adjustable-rate bonds will be sold during the week of March 31, under a separate offering circular, according to the TFA. The remarketing agents for the adjustable rate bonds are expected to be BofA Securities and TD Securities.
