New York issuers plan to sell about $4.7 billion of long-term debt next week, the most in at least 10 years, led by a deal to refinance bonds for the Long Island Power Authority.
New York City is set to issue $700 million of general obligations Dec. 10, followed the next day by the state’s Utility Debt Securitization Authority with a $2.1 billion deal to refund LIPA securities. New York’s Thruway Authority plans to offer $1.6 billion of revenue debt Dec. 12 for the construction of a $3.9 billion replacement of the Tappan Zee Bridge spanning the Hudson River north of Manhattan.
The sales will find enough buyers because of the different repayment pledges -- general obligation, electric power, tolls - - and the varied credit ratings, said Matt Dalton, who manages $1.8 billion of munis at Belle Haven Investments Inc. in White Plains, New York. Grades on the deals range from AAA to six steps below the top.
“If you were driving three double-A rated deals into the market that might be a little overkill, but there’s separation between the credits,” Dalton said.
The week stands to be the busiest for New York and its localities since at least 2003, data compiled by Bloomberg show. The state and its municipalities have sold $28.3 billion of long-term debt this year, trailing $42.9 billion from first-place California.
Investors have received coupon and maturity payments in December that they’ll need to reinvest, Dalton said. Demand helped lower yields on some maturities on New York’s $1.2 billion Tobacco Settlement Financing Corp. bond deal that priced this week, Dalton said.
The state is poised for its best bond grade since 1972 from Standard & Poor’s after the first three consecutive on-time budgets since 1984.
Investors are responding by demanding less extra yield to buy New York debt. Yields on 10-year obligations are 0.11 percentage point above those on benchmark munis, down from a 2013 peak of 0.45 percentage point in January, Bloomberg data show.
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