The Metropolitan Transportation Authority plans to use bonds designed to help New York City’s subway operator guard against storm surge damage after suffering $4.8 billion in wreckage from Hurricane Sandy.
The largest U.S. transit agency will buy protection from MetroCat Re Ltd., a Bermuda-based special-purpose insurer that plans to issue the three-year securities, Standard & Poor’s analysts led by Gary Martucci wrote in a July 12 report. The bonds have a preliminary rating of BB- (sf).
Sandy struck New York on Oct. 29, triggering a tidal surge that inundated rail stations and tunnels. It coated electrical and communications equipment with corrosive saltwater and destroyed Manhattan’s newest subway stop.
Bond investors would stand to lose money if future storm surges exceed certain thresholds that Sandy would have breached, triggering payments to the MTA’s First Mutual Transportation Assurance Co., according to the report.
Aaron Donovan, a spokesman for the MTA, said he couldn’t immediately comment on a potential bond sale.