Jay Olson has worked for New York City’s financing program since 1998. When he said last week was “stressful,” he meant it.
“I’ve been through 9/11, I’ve been through the Great Recession in ’08, I’ve been through COVID,” Olson said. “And then we get to this week, and the amount of market turmoil was comparable to those events, in spite of the fact there wasn’t a terrorist attack or global pandemic.”
But New York City sailed the market’s turbulent seas, priced $1.57 billion of bonds, and will be back for more on Tuesday.
“We’re very much on task tackling the sheer volume of what we need to do to fund our ongoing capital expenditures,” said Olson, the city’s deputy comptroller for public finance.
New York’s deal on Tuesday consisted of two series. The first was $1.5 billion of tax-exempt GOs. The second series, $71.88 million, reoffered a series of GOs from 2012 and converted them from variable to fixed rate.
The bonds are rated Aa2 by Moody’s Ratings, AA by S&P Global Ratings and Fitch Ratings, and AA-plus by KBRA.
Loop Capital Markets was the book-running lead manager on the bonds. BofA Securities, J.P. Morgan, Jefferies, Ramirez & Co, RBC Capital Markets, Siebert Williams Shank, and Wells Fargo Securities were co-senior managers, and 18 other firms were co-managers. PRAG and Frasca & Associates were co-municipal advisors and Norton Rose Fulbright and Bryant Rabbino were co-counsels.
The city received nearly $140 million of orders during the retail order period and $4.2 billion of priority orders during the institutional order period, according to a press release.
Final yields ranged from 3.10% in 2027 to 4.87% in 2053, the release said.
“That doesn’t feel horrible, but, you know, lower would’ve been better,” Olson said. “I would have hoped to have zero, but that’s not pragmatic.”
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“Later isn’t open,” Olson said. “Later is already booked.”
The city is charging full steam ahead for this week’s deal, $1.75 billion of taxable GOs. Olson said he’s trying to tap into a “deeper reservoir of fortitude.”
RBC Capital Markets is lead manager with 25 co-managers. PRAG and Frasca & Associates are co-municipal advisors, Norton Rose Fulbright and Bryant Rabbino are co-counsels. Pricing the deals in back-to-back weeks, Olson said, allows the city to use the same disclosure documents for all of the bonds.
The taxable market is a different market, Olson said, and may offer a different experience.
“We are still looking to achieve the number that we’ve printed. What the market will bear is another story,” he said. “It’s not entirely clear to me that the corporate investment-grade market is entirely open, so we’re keeping an eye on that and seeing what’s viable as we move forward into next week.”
Patrick Luby, senior municipal strategist at CreditSights, said he expects “the new issue market will be picking up steam” next week as issuers dust off the deals they delayed. Aside from tariff-related turbulence, borrowers will have to contend with this year’s historically high volume and “greatly diminished reinvestment demand.”
But New York City will have some advantages, Luby predicts.
“As a taxable GO bond, I expect very strong demand from IG investors looking to diversify their credit risk beyond corporate bonds,” Luby said. “The ability to place [last] week’s deal will boost the confidence of buyers for the taxable deal.”
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“Anyone who’s thinking about putting money to work right now — especially in munis, because of the lesser liquidity in munis — is going to want to be compensated for providing liquidity into the marketplace, because of the extreme uncertainty in the market environment,” Luby said.
New York’s capital needs mean the city cannot afford to be picky, Olson said.
“I would imagine other issuers might have a line in the sand [for yields] they wouldn’t cross. I don’t think that’s where we are, given the sheer volume of what we need to get done,” Olson said. “If the market will bear our issuance, we generally accept.”
Simultaneously, the city’s size makes it essential to investors, Luby said.
“It’s an enormous economy, enormous population, enormous U.S. and global business hub,” Luby said. “So if you’re in the U.S. market, if you’re in the muni market, New York needs to be a core part of your portfolio.”
Tariffs are not the only problem that the federal government has caused for New York.
Both the city and the state have been targeted by the Trump administration, through
The city is
“I don’t think that any credit analyst or portfolio manager can be oblivious to [the federal threats],” Luby said, “but I don’t think, as of yet, it represents a significant alteration to the fundamental credit risk of the city and fundamental credit strength of the city as an issuer.”
Olson said he expects the OMB to weigh the tariffs and potential federal cuts and their impacts on New York’s capital plan. But the financing team has a narrow focus, and he’s simply responsible for securing the funds for the city’s capital needs.
So far, Olson said, he’s seen worse. He recalled attempting to price a senior lien deal for the Transitional Finance Authority in 2008, amid market meltdowns
“We were only able to eke out 200 million. And that was low for us, even back then,” Olson said. In “subsequent issues, we would maybe be able to achieve 50% of the volume we were looking to get at the time. So we just kept on banging away and getting what we could.”