Market Volatility Forces MTA to Revise Bond Issue
Thursday, October 16, 2008
New York, NY —
The turmoil in the bond market has forced the MTA to rethink a half-billion dollar bond issue.
The transit agency delayed selling the bonds for two days because of weak demand. This morning, it got into the market, but reduced the amount it wanted to borrow to $200 million.
The bond's high-yielding interest rate -- up to 6.5 percent -- will force the transit agency to devote more of its budget to financing costs, but it's too early to say how much. The MTA's Gary Dellaverson says he assesses the market every day to determine when to put the other $300 million worth of bonds on sale.
DELLAVERSON: If it were to be a long-term condition, it would be something of great concern because MTA relies heavily on the bond market to finance its capital projects.
The MTA borrows several billion dollars a year through the bond market. Today's issue is not pegged to any one project, but will provide general support to the capital program, which calls for station renovations, new train cars and mega-projects like the Second Avenue subway.