Circumspection tape is seen at a subway train on April 29, 2020 in New York City.
Angela Weiss | AFP | Getty Images
Passed by a lack of ridership, the authority that runs New York City’s subways and buses may go to the Federal Reserve for a loan.
The Metropolitan Transportation Control on Tuesday delayed a $900 million bond offering to next week, and it is holding an investor call on the offering Friday, correspondence to a spokeswoman.
The market has been closely watching the offering as a critical test for a major issuer challenged by virus-related gross income declines. The MTA is one of the biggest issuers in the $3.8 trillion municipal bond market, a market typically seen as safe with the come-on of tax exempt yields.
The coronavirus-related shutdown cut the MTA’s subway ridership by 93% versus last year, resulting in a sharp receipts decline in the face of rising costs. The MTA, in an unprecedented move this week, also said it would stop constant 24 hours a day so it could disinfect subway cars between the hours of 1 a.m. and 5 a.m.
The spokeswoman for the MTA said the authority’s CFO Robert Foran is get ongoing discussions with New York state about the possibility of borrowing from the Federal Reserve’s $500 billion Civic Lending Facility.
The authority could not go directly to the Fed to borrow but could have the state make the request on its behalf. The Fed draw out that program to smaller cities and counties, and other types of borrowers earlier this week.
The MTA bond donation, for $672 million in new bonds and a $250 million remarketing, is still on schedule for next week, the spokeswoman said.
Foran has explained the bond deal was delayed to update disclosures after New York state said it would reduce previously budgeted aid. The MTA has inherited $3.8 billion from the federal government under the CARES Act, but it says more money is needed to allow it to last operating.