New York City recently securitized this year's batch of tax liens in a $156.8 million deal structured in accordance with Rule 144A and sold into the private placement market.

Bear Stearns & Co. was the lead manager on the non-tax exempt offering.

As opposed to previous years, where New York normally launches two deals - one backed by high-lien-to-value collateral, the other backed by low-lien-to-value - this year New York structured one inclusive deal.

The city chose this structure to achieve better execution, one source said. The deal was separated into four tranches: class-A through class-D, with coupons ranging from 7.52% to 8.99%.

Further, according to David Zhai of Moody's Investors Service, the transaction incorporated a residual piece from New York's 1998-2 deal.

"The city has a two-year foreclosure completion period," Zhai explained, referring to the logic behind resecuritizing the residual. "If you want to foreclose the property you have to wait two-years to execute the foreclosure."

In the 1998-2 deal, there are a number of properties that are filed for foreclosure, that will soon be ripe for liquidation.

"You will see the cash flow come out of that very soon," Zhai explained.

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