FOR RELEASE: Immediate, Wednesday, January 24, 2003

Board Approves Bonds With Interest-Rate Swaps

NEW YORK � The Board of the Dormitory Authority today approved refunding bonds using interest-rate exchange agreements, or swaps, as part of Governor George E. Pataki�s program to restructure the State�s bond portfolio to lower debt-service payments and save taxpayers money.

For the City University of New York, the Board approved issuances of multiple series of refunding bonds � taxable and tax-exempt, fixed- and variable-rate modes � of no more than $2.7 billion. The Authority plans to use swaps for the variable-rate debt, making fixed-rate payments and receiving floating-rate payments from its counterparties.

Depending on market conditions, the Authority is considering selling up to $1.15 billion in tax-exempt swaps, with about $506 million in taxable fixed-rate bonds, $302 million in tax-exempt convertible bonds, and $199 million in tax-exempt fixed-rate bonds. The maturities of the refunding bonds will not exceed those of the refunded bonds. Salomon Smith Barney will be the lead manager for these negotiated sales.

The Board also approved the issuance of $210 million in multiple series of tax-exempt or taxable, fixed- and/or variable-rate bonds under the Personal Income Tax Revenue Bond Program to fund new economic development projects. J.P. Morgan will be the lead manager for these negotiated sales; maturities will not exceed 30 years.

These bonds will support the following programs:

Strategic Investment Program (tax-exempt)
Community Enhancement Facilities Assistance Program (tax-exempt)
Rebuilding the Empire State Through Opportunities in Regional Economies (tax-exempt and/or taxable)
Generating Employment Through New York Science (tax-exempt and/or taxable) and
Multi-Modal Program (tax-exempt and/or taxable).

Bonds sold under the PIT Program are rated comparably to the State�s AA rating in part because of the statutory payment mechanism. These sales will reduce the State�s borrowing costs by improving the State-supported obligations� creditworthiness and marketability. Additionally, consolidating the issuance of multiple bonding programs will reduce State�s administrative costs.

For more information, contact Press Officer Claudia Hutton at (518) 257 3382, or CHutton@dasny.org.

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