Two days ago I wrote about how the MTA turned to former NYC Mayor Ed Koch who pitched the idea of buying MTA Bonds. Now after realizing the conditions of the bond market, it realized that their goal would not be attainable. This has led them to scale back on their bond issue by $300 million. WNYC has more in this brief report:
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.
The scaling back of this bond issue comes as no surprise to me. The chances of the MTA reaching their target goal was slim to none considering the global financial crisis engulfing everyone. Putting that aside though, one can only hope that the issuing of the remaining $300 million in bonds is not delayed for a prolonged period of time. As if it is, that will seriously bring up the potential of construction delays on a number of big ticket projects. This is the last thing that our transit infrastructure can afford to have happen.
xoxo Transit Blogger