Mayor Dinkins to Meet With European Bankers To Discuss Credit Enhancement on City Bonds
New York City Mayor David N. Dinkins will meet this week with the heads of major banks in the United Kingdom, France, and Germany during his six-day trade mission to Europe in an effort to persuade these institutions to provide credit enhancements for future city bond deals, city sources said.
Mr Dinkins will sit down with the officials in a series of formal and informal meetings beginning this afternoon in London, where Mr. Dinkins; Barry Sullivan, deputy mayor for economic development; and other city officials will take part in a luncheon with British business leaders sponsored by Barclays Bank Plc.
Mr Dinkins will then meet with bankers and business leaders in France on Wednesday and Thursday, and will conclude his trip with visits to the German cities of Frankfurt and Hamburg.
The trip was organized by the New York City Partnership and the Chamber of Commerce, a local business group. Partnership President Ronald K. Shelp and the group's chairman, Preston Robert Tisch, who is also president and chief executive officer of Loews Corp., chose Mr. Dinkins to head their delegation to Europe. The trip is designed to attract international investment in the city and retain those companies that have established ties with New York City.
City officials, who asked not to be named, would not provide the names of the banks from which Mr. Dinkins and city officials plan to seek additional credit enhancements through letters of credit. One city source described these meeting as "an additional issue."
The city was given variable-rate barrowing powers in 1991 by the state Legislature.
Most letters of credit are a legal obligation by a bank to pay principal and interest in the event an insurer defaults on its short-term debt. The source said the city is seeking lower its interest cost in future borrowings of variable-rate debt.
At the moment, the city, the city has obtained letters of credit from Morgan Guaranty Trust Company of New York, Industrial Bank of Japan, Fuji Bank, and Sumitomo Bank.
In addition, the city is somewhat concerned about the credit quality of its Janpanese LOC providers, which have suffered downgrades in recent months due to an erosion in both the Tokyo stock market. the Janpanese real estate market.
The more active British banks in the LOC market include National Westminster PLC and Barclays; in France, Credit Local de France and Societe General; in Germany, Commerzbank AG and Dresdner bank AG; and in Switzerland--where triple-A ratings currently predominate -- Swiss bank Corp., Union Bank of Switzerland, and Credit Suisse.
The source said the city will not need this additional letter of credit capacity for its next bond deal. The source said the city obtained additonal capacity to complete the deal. after a refunding in December by J.P. Morgan.