(Changes deals total to $870 million in paragraph 9)
* MTA debt deals to go ahead next week
* Bond payments on schedule
* No shifts planned in capital projects
By Michael Connor
Nov 1 New York's Metropolitan Transporation
Authority on Thursday quelled some market concerns that its
already strapped finances could be further strained by cleanup
costs after the massive storm Sandy flooded streets and subways.
The chief financial officer of the largest U.S. mass transit
system said that he does not expect to borrow extra money and
the finance director added that debt issuance will proceed as
"At this stage, I am not anticipating the need for external
borrowing," CFO Robert Foran said in a conference call with
reporters. "We fully expect the operating and capital costs will
be fully reimbursed by FEMA and our insurance."
The Federal Emergency Management Agency confirmed earlier on
Thursday that federal funds will cover all emergency public
transportation costs through Nov. 9 in New York.
But some traders in the $3.7 trillion municipal bond market
think the MTA may have to raise fares and endure a decline in
credit ratings that would translate into higher borrowing costs.
"You have to think (the Sandy fixes) will significantly raise
its debt burden and push them lower in the investment grade
category," said Jim Colby, senior municipal strategist at Van
Some concerns were also expressed by the New York State
Comptroller Thomas DiNapoli on Wednesday. He said that over a
longer period, the MTA may have to shift some capital projects
because of the repairs.
The MTA, which operates New York City's subway and buses, as
well as trains to suburbs and various bridges and tunnels, was
still calculating the costs from this week's flooding and fierce
winds and has no estimates of the financial fallout.
A leading issuer in America's municipal bond market, the MTA
was pushing ahead with $870 million in debt sales next week,
including an offering o f $2 60 million of floating-rate notes
delayed from this week because trading was interrupted by Sandy.
"We are anticipating good investor interest next week," said
Pat McCoy, the MTA's director of finance.
Moody's confirmed an A2 rating on the revenue bonds, with a
stable outlook. In a report on the storm impact on municipal
issuers, the rating agency said that public transportation
systems could be particularly challenged because they suffer a
double whammy from lost revenue while inoperable and from the
additional costs of the cleanup.
Institutional investors said next week's bond sales should
go smoothly, with lots of bidders for the MTA bonds.
"The muni market is flush with cash," said Dan Heckman,
senior vice president at U.S. Bank wealth management. "I think
demand will be strong. I may be wrong but there may even be a
McCoy added that the MTA would have "no problem" in meeting
bond payments due on Nov. 1 and Nov. 15 on some of its nearly
$32 billion of outstanding bonds.
Foran said he expected no changes because of Sandy in the
MTA's capital improvements projects, which are expected to cost
$24 billion over five years ending in 2014.
(Reporting by Michael Connor in Miami; Editing by Jackie Frank,
Leslie Adler and Bob Burgdorfer)