The administration of New York City Mayor David N. Dinkins may hold off issuing debt under a proposed commercial paper program that had been targeted to begin by year's end, city officials said.
Mark Page, deputy director of the city's Office of Management and Budget and executive director of the city's Municipal Water Finance Authority said yesterday that the city has not made a formal decision either on the timing of the first issue under the program or whether the program should go forward at all. The program would be the first commercial paper venture for the water authority.
Page gave no reason for the apparent change in plans, which comes amid complaints by some Wall Street bond dealers who criticized the timing of the request for proposals as well as the time frame proposed for the initial sale.
The RFP was released by the water authority three days before Thanksgiving and was due back this past Tuesday, which gave bond dealers little time to develop an underwriting proposals, several dealers said. The authority has scheduled oral interviews for today.
Investment bankers also said the Dinkins Administration should not launch a new debt program only weeks before it relinquishes City Hall to Mayor-elect Rudolph Giuliani.
"I'm sorry if we interfered with people's digestion over the holiday," Page said. "Can we manage to bring it off before the end of December? I don't know. It's conceivable. It's also quite possible we won't."
The requests for proposals said that the water authority "is considering implementing a commercial paper program, or a program involving a similar type of short term debt instruments in December 1993 in an amount of $200 million to $500 million."
For several months, city and authority officials have considered launching a commercial paper program as a way of tapping the short-term debt market. City officials have said that the commercial paper issues could supplement the authority's use of the state environmental revolving fund for certain capital projects.
Under the program, the state Environment Facilities Corp. issues bonds on behalf of the water authority. Although the authority is responsible for debt service on the securities, the program allows the authority to tap into both federal and state subsidies.
But because the state corporation does not immediately reimburse the city for water authority projects, city officials have considered using commercial paper as a bridge loan until money comes in.
Several Wall Street bond dealers said the program is a good way for the authority to raise short-term cash.
But some dealers complained that they were forced to develop the new financing strategy in little more than a week, and said they felt offended that the city asked them to come up with the plan during the Thanksgiving holiday.
"They do this all the time," said one bond dealer, recalling how the city last year issued an RFP for underwriters on its general obligation bond syndicate during Christmas. The city "has no respect for anyone's family."
In addition to Wall Street, not everyone in the Dinkins Administration is happy about the RFP's release and the initial financing schedule.
Citing concerns about the timing of the RFP, at least one city finance official has said that the bonding will likely not go forward in December, and that the program should be handed over to the Giuliani Administration, which will take office in January, one city source said.
"Some people in City Hall are saying ~I don't see any reason for doing this now,'" the source said.
Besides the commercial paper program, the rash of city bond deals that will hit the Street this month have municipal investment bankers concerned.
"The city used to do a deal a quarter; now they're doing several in about three weeks," said one bond dealer, who asked not to be quoted by name.
The city is planning within the next two weeks to issue general obligation bonds and bonds through the Dormitory Authority to finance court improvements. The city Health and Hospitals Corp. may also issue new-money debt and refunding bonds by year's end.
