The city of New York is selling $496.2 million in triple-A rated taxable muni bonds via the Fiscal Year 2005 Securitization Corp. vehicle, a one-off transaction for the city being led by Merrill Lynch.

The bonds being issued are essentially a refinancing of general obligation bonds sold by the city in 1992 that advance refunded bonds it had sold between 1985 and 1991. The advance refunded bonds were escrowed to maturity, though the city expressly reserved the right to call the bonds. "This is basically a restructuring of an escrow account," said a spokesperson at the city's Office of Management and Budget. "These special obligation bonds are backed by U.S. government or U.S. government guaranteed securities in the escrow."

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