REFILE-Scandal-tainted Port Authority of NY/NJ to sell $400 mln bonds next week

Fri Jun 13, 2014 3:17pm EDT

Related Topics

(Corrects typographical error in headline to tainted instead of tinted)

By Lisa Lambert

WASHINGTON, June 13 (Reuters) - Despite the continued fallout of the "Bridgegate" scandal, the Port Authority of New York and New Jersey will sell $400 million bonds next week.

The Securities and Exchange Commission is conducting a parallel investigation of the scandal to the New York County District Attorney's review, the authority disclosed in preliminary documents for the sale released on Thursday.

The authority also said it has received and is responding to several grand jury subpoenas from the U.S. Attorney's office and the district attorney "pertaining to the Port Authority's involvement in certain specified projects and activities." At the same time it is responding to subpoenas from a statehouse investigation committee and a request for information from the New Jersey State Ethics Commission.

In April, the publication Main Justice said the SEC was looking into New Jersey's use of up to $1.8 billion in tax-exempt bond financing from the Port Authority to fix bridge and roadways feeding into the New Jersey side of the Holland Tunnel. The SEC does not confirm or deny the investigation, and the public typically learns of its activities from issuer disclosures.

The two-state authority is considered a solid credit, with an AA- credit score from both Fitch Ratings and Standard & Poor's Ratings Services.

Still, it is under increasing scrutiny since it was revealed New Jersey Governor Chris Christie engineered a traffic jam on the George Washington Bridge as part of an alleged act of political retaliation. Bond buyers could demand higher yields amid new perceived risks.

With the $3.7 trillion municipal market starved for supply, though, the sale could attract strong demand.

Issuance in 2014 has been lagging last year, and the $400 million bonds will help bring total sales next week to $7.052 billion, down from this week's calendar, which topped $8 billion, but higher than many other weeks.

The authority will sell the bonds competitively on Tuesday, marking the largest competitive deal out of the week's expected $2.48 billion total. The debt will have serial maturities spanning from 2035 through 2044, and can be called.

Negotiated sales are expected to total $4.58 billion next week, with a Texas transportation refunding deal of $900 million underwritten by Bank of America Lynch on Wednesday topping that calendar. Oregon will have the second largest negotiated sale - $590 million tax anticipation notes pricing on Tuesday.

In the first quarter of 2014, Port Authority bonds maturing in 2037 traded hands 2,058 times, becoming the second most heavily debt after Puerto Rico's junk deal issued that quarter.

The authority last came to market in January with a $1 billion taxable deal. Those bonds sold at yields that were as much as 155 basis points more than comparable Treasuries.

The authority's last tax-exempt bond deal, in November, traded throughout this week. A bond maturing in 2038 with a 5 percent coupon yielded 4.002 percent in an inter-dealer trade on Friday morning, Municipal Securities Rulemaking Board data shows. (Reporting By Lisa Lambert; Editing by Bernard Orr)

FILED UNDER:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.