New York City Wraps Up $694 Million Tax-Exempt Muni Offering

New York City wrapped up a $694 million issue of debt in its first general-obligation sale since Mayor Bill de Blasio took office Jan. 1.

The tax-exempt deal included a portion maturing in March 2024 that priced to yield 2.9 percent, up from the 2.83 percent at which it was marketed March 4, data compiled by Bloomberg show. The yield is 0.43 percentage point more than benchmark municipal bonds, Bloomberg data show.

The difference is about 30 percent greater than when New York sold tax-free general obligations a year ago. The portion of that deal maturing in March 2023 yielded 2.23 percent, or 0.33 percentage point more than AAA debt, Bloomberg data show. Former Mayor Michael Bloomberg is founder and majority owner of Bloomberg News parent Bloomberg LP.

De Blasio, 52, the first Democrat to run the most populous U.S. city in 20 years, has an incentive to control borrowing costs so less of his $74 billion budget pays for debt service.

The mayor’s initiatives include paying for early childhood education, building 200,000 units of affordable housing over 10 years and settling expired labor contracts with 300,000 public workers. Negotiating new agreements may cost $6.3 billion.

Issuer Rank

Investors in the $3.7 trillion municipal market monitor yields on New York debt because it is the second-biggest issuer of general-obligation bonds nationwide, trailing only California, Bloomberg data show. Its $41 billion of general obligations represent more than 1 percent of the market.

Moody’s Investors Service and Standard & Poor’s assign New York their third-highest grades, with stable outlooks.

New York sold to institutions such as mutual funds yesterday after two days of marketing to individual investors. It issued into a rallying municipal market, with benchmark yields falling to the lowest since June this week.

The city’s Transitional Finance Authority and water agency have also borrowed this year.

To contact the reporter on this story: Brian Chappatta in New York at bchappatta1@bloomberg.net

To contact the editor responsible for this story: Stephen Merelman at smerelman@bloomberg.net

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