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World Trade Center Bonds to Be Repaid After Port Authority Debt

Oct. 20 (Bloomberg) -- Investors in a planned $1.3 billion bond deal to help rebuild the World Trade Center will be paid only after the Port Authority of New York and New Jersey, which oversees the project, pays off other debts in an agreement to let the sale proceed.

The New York Liberty Development Corp., created to help finance construction of the Lower Manhattan complex, plans to sell the tax-exempt revenue bonds as soon as next month. The securities to finance 4 World Trade Center may yield about 5.25 percent, according to a resolution that the authority’s board approved today.

While rent from the Port Authority will help repay the corporation’s so-called Liberty bonds, the agency must first pay principal and interest on its own debt, according to the resolution.

Holders of $1.2 billion in Port Authority bonds said this year that their contracts keep the agency from paying other bondholders before them.

Liberty, an arm of the state-created Empire State Development Corp., in April delayed a $900 million bond deal for the tower, citing market considerations.

To contact the reporter on this story: Michelle Kaske in New York at mkaske@bloomberg.net

To contact the editor responsible for this story: Mark Tannenbaum at mtannen@bloomberg.net

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