Big projects at risk as MTA scales back bond issueBy
The MTA may be facing a cash-flow shortage over the next few months.
Earlier this week, amidst a collapsing economy, the MTA issues a $500 million bond request. The cash-strapped transportation agency had hoped to generate cash flow by selling off bonds. This money was destined for high-profile, big-ticket projects such as the Second Ave. Subway.
Well, it turns out that the middle of an economic crash is not a good time to attempt a bond issue. According to WNYC, the MTA has already scaled back its request by $300 million, and it’s unclear how this turn of events will impact the transit authority and its bottom line. WNYC has more:
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 issued a cautious warning. “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,” he said.
In the short term, Dellaverson will keep his eyes open for a better time to issue the other $300 million in bond requests the MTA would like to fulfill. In the meantime, though, this MTA will be hoping for a break in the market. Any delay in this bond issue could result in a slowdowns in construction on the East Side or the 7 Line extension, and we could be in for yet another delay in the long and tragic history of the subway along Second Ave.