Feb 7 The possibility New York City could lose
some federal funding as a result of its status as a haven for
undocumented immigrants did not deter investors who snapped up
$900 million of the city's bonds on Tuesday.
Underwriters led by Citigroup repriced the AA-rated
general obligation bonds, shaving yields by a basis point in a
handful of maturities. Yields topped out at 3 percent for bonds
due in 2029.
The city's so-called credit spread over Municipal Market
Data's benchmark triple-A yield scale widened slightly to 22
basis points for five year bonds and 36 basis points for 10 year
bonds from pre-sale secondary market trading levels. MMD
attributed the spread widening to the size of the deal, which
was increased from $800 million.
"It's too early to know how the market will treat the
sanctuary cities," said Daniel Berger, a MMD analyst.
Jack Sterne, a spokesman for the New York City Comptroller's
Office, said the deal was increased to $900 million after more
than $600 million of bonds were sold to individual investors
during a presale period.
"We're pleased investors continue to recognize the city's
financial strength and invest in our bonds," he said in a
Ahead of the sale, New York tried to assure potential bond
buyers that its status as a so-called "sanctuary city" that
shields illegal immigrants should not result in a substantial
loss in federal funding due to President Donald Trump's recent
The Republican president signed an order on Jan. 25
directing the U.S. attorney general and Homeland Security
secretary to withhold federal money from cities where local law
enforcement refuses to report undocumented immigrants they
encounter to federal authorities. Trump's Homeland Security
chief told a congressional panel on Tuesday that funding to
cities that refuse to cooperate with immigration agents would
only be cut on a case-by-case basis.
In the bond deal's preliminary official statement, New York
said federal grants related directly to immigration enforcement
comprise a small portion of its budget and that grants
supporting law enforcement in general would be exempted from the
order. The city also vowed to "mount a vigorous legal challenge"
against a reduction in federal aid.
In addition to New York, other major cities offering some
form of protection to illegal immigrants include Los Angeles,
Chicago, Philadelphia, Boston, Denver, Washington, and Seattle.
Another sanctuary city, San Francisco, filed a legal challenge
to the order last week.
(Reporting By Karen Pierog; Editing by Tom Brown)