MTA Revenue Refunding 2016B

$673,990,000
Transportation Revenue Refunding Bonds Series 2016B (June)

$48 million in bonds were placed with an investor who wished to retain an existing exposure to MTA bonds

In June Siebert Cisneros Shank served as joint book-running manager for the New York City Metropolitan Transportation Authority’s $674 million Transportation Revenue Refunding Bonds.
The transaction consisted of $543 million in serial maturities from 2018 through 2037, with 3%, 4%, and 5% coupons offered in the non-callable maturity range and 4% and 5% coupons offered in the maturities with a 10-year par call. The retail spreads on the longest maturities were set at plus 40 bps. All maturities were offered to retail investors, and the retail order totaled $263 million.
Given the strength of the retail book, the institutional yields were reduced by 1 basis point in certain spots, despite increases in MMDs of 1 to 2 bps throughout the curve. This resulted in overall effective tightening of spreads by 1 – 3 bps across the curve.
Institutional demand was strongest in the 2035 to 2037 maturities and much more limited in the 2028 to 2033 maturities.
With a lack of demand in 2028 through 2032 and an abundance of orders in 2035 through 2037, the Authority decided to substitute its shorter-term refunding candidates with those that have longer maturity dates in order to better match the stronger order flow. The substitution resulted in a net par increase of approximately $74 million.
Of the $674 million offered, $48.5 million in bonds maturing in the 2031 – 2033 maturities were privately placed to a holder of refunded bonds who wanted to retain their existing exposure to the Authority and offered to purchase the bonds at a rate slightly below market.