N.Y. Cleanup Bonds Attract Heavy Interest

Investors placed $4 billion worth of orders for the $1 billion in bonds sold Tuesday by New York City to meet immediate cleanup and relief costs from the World Trade Center attack.

Mayor Rudolph W. Giuliani called the response to city bonds the strongest in city history. He said people were eager to “make a statement that they support New York, but also that they realize the economy of New York is a very, very strong one.”

City budget director Adam Barsky called the sale a “home run.”

The offering through the city’s Transitional Finance Authority will help New York pay trade center-related expenses, including unemployment insurance premiums, overtime, private contractors’ charges for removing debris and the cost of housing and feeding rescue workers.

The interest rate on the one-year securities, which are free from city, state and federal taxes, is 2.13%. They sold in minimum $5,000 increments.

Jay Donnaruma, a Paine Webber analyst, said buyers covered the spectrum from individuals to mutual funds. The bonds were sold on a first-come, first-served basis. Barsky said they sold out in about two hours.

While patriotism and support for New York played a role in the popularity of the offering, Donnaruma said the Federal Reserve’s lowering of its key interest rate Tuesday was also a factor.

It made the tax-exempt New York City bonds more attractive than taxable money market accounts or certificates of deposits for many investors, Donnaruma said.

The cost of cleaning up the trade center ruins and rebuilding the surrounding area has preliminarily been placed at $39 billion.