The New York State Thruway Authority plans to issue its second installment of state highway and bridge trust fund bonds about a month earlier than originally scheduled with a $240 million deal slated for next Wednesday.
The authority has chosen Dillon Read & Co. as the transaction's senior manager. Smith Barney Inc. served as senior manager for the authority's first trust fund issue in August.
Bear, Stearnsk Co. and Goldman, Sachs & Co. will co-manage Wednesday's deal. The authority is scheduled to issue more trust fund debt in the spring and fall of 1995, sources with knowledge of the issue said.
The bond transactions will help pay for Gov. Mario M. Cuomo's multibillion-dollar transportation financing plan. Under the program, the authority can issue $2.9 billion in bonds on behalf of the state. Following Wednesday's transaction, the authority will have sold about $615 million in trust fund bonds.
The securities are supported by the state's Dedicated Highway and Bridge Trust Fund, a holding pen for several transportation-related taxes, including the petroleum business tax.
Officials in the state's budget division chose to move up the sale date of the next issue to October from November based on "scheduling considerations," spokesman John Clarkson said. Clarkson said the issue was ready for pricing, while other state sales were not.
"We started out with a rough order," Clarkson said. "This [deal] was always going to be this year, anyway. Now it's just a little earlier."
In addition, the state seemingly increased the size of the deal to about $240 million from about $200 million that the state had estimated in August. "The deal got a little bigger as the state anticipated its spending needs," said one municipal executive who is working on the transaction.
The Thruway Authority's first trust fund issue received an A rating from Moody's Investors Service, an A-minus from Standard & Poor's Corp., and an A-plus from Fitch Investors Service. Ratings for Wednesday's deal are not available, although the authority does not expect a change from current levels.
Investors were eager to purchase the original transaction, following a state court of appeals ruling that affirmed the constitutionality of state-appropriated bonds like these.
Appropriated bonds are state bonds sold through an authority. Debt service is only paid following legislative approval. As a result, these bonds are often rated tower than the state's general obligation bonds.
In order to address bondholder concerns over this form of debt, the state has passed legislation that bankers say all but forces lawmakers to appropriate debt service payments. Under the legislation, the state must make the appropriation in order to receive excess sales tax money tied to payment of bonds sold by the Local Government Assistance Corp.