The pricing of $375 million of bonds by the New York State Thruway Authority on Tuesday has cleared the way for two more authority issues that could hit the market before yearend.
Although the authority has not set a formal sale date for the upcoming issues, Wall Street executives with knowledge of the bonding program say the authority will enter the market in late August or early September, and once again in the fall.
This week's transaction was the first authority issue to rely on the state's dedicated highway and bridge trust fund for revenues to pay interest and principal on the bonds. Moody's Investors Service rated the issue A; Standard & Poor's Corp., A-minus; and Fitch Investors Service, A-plus.
The authority chose Smith Barney Inc. as lead manager for the issue, which helped finance state bridge and highway improvements under Gov. Mario M. Cuomo's multibillion transportation improvement plan.
State officials say they will follow Tuesday's deal, which will close on Aug. 11, with a $200 million Thruway bond offering. The sale is scheduled for September, but Wall Street executives say the sale could take place in late August.
The second installment of securities will finance local transportation improvements but will not tap the highway and bridge trust fund as a revenue source. Instead, these bonds will rely on annual appropriations from the state's budget.
For Wall Street, a real wild card will be the timing of the next sale of trust fund bonds. Officials in the state budget division say they have set no official timetable for the sale. But Wall Street executives with knowledge of the sale say the issue could take place before the end of 1994, and possibly before November of this year.
In addition to the timing of the issue, Wall Street is also gearing up for the selection of a firm other than Smith Barney to serve as senior manager for the next trust fund issue.
In 1993, the authority chose Smith Barney; Dillon, Read & Co.; Goldman, Sachs & Co.; and Bear, Stearns Inc. to serve as senior managers for at least part of the $2.6 billion trust fund program, with Smith Barney serving as lead manager for the first transaction.
The authority planned to keep the four-firm senior manager syndicate until sometime in 1995, and must now choose a firm as lead underwriter for the next transaction.
Frederick Clark, the Thruway Authority's finance director, said the agency has not given much thought to the upcoming underwriter selection, instead concentrating its efforts on the successful closing of Tuesday's offering.
Executives at the authority's financial adviser, O'Brien Partners Inc., also say the focus is on Tuesday's sale. "We still need to do a review of the last issue before we focus on the next one," said Daniel H. Cohen, a director at the firm.
Wall Street, as one might expect, has taken a different view. The three remaining players have been jockeying for the past six months to demonstrate their knowledge of state bond issues.
The jockeying became most intense during meetings where state officials and underwriters discussed ways to improve the trust fund credit, which included the introduction of legislation to stabilize petroleum business tax revenues.
The tax represents the largest source of revenues flowing into the trust fund.
"They're all positioning themselves for the next deal," said one executive with knowledge of the issue. "There was a lot of grandstanding. People were concerned who the authority might leave out."
