Press Release|Public Finance
KBRA Assigns AA+ Rating, Stable Outlook, to the City of New York's General Obligation Bonds
20 Mar 2024 | New York
KBRA assigns long-term ratings of AA+ with a Stable Outlook to The City of New York's General Obligation Bonds - Fiscal 2024 Series D, Series E, Series F, and General Obligation Bonds - Fiscal 2006 Series I, Subseries I-4 and Fiscal 2006 Series I, Subseries I-5. Concurrently, KBRA affirms the AA+ rating and Stable Outlook on the City's outstanding General Obligation Bonds.
Key Credit Considerations
The rating was assigned because of the following key credit considerations:
Credit Positives
- The City’s role as international business and cultural center commensurate with its status as the nation’s largest city, and position as the center of a large metropolitan economy.
- Institutionalized policies and procedures support financial stability.
- Long range financial and capital planning; pension funded ratios and unfunded liabilities have trended positively, while annual debt service requirements continue to be maintained at below 15% of City tax revenues.
Credit Challenges
- Economic base remains susceptible to financial services sector cycles, although reliance has moderated with increasing diversification.
- Absent significant Federal and/or State funding to assist the City in handling the continuing influx of asylum seekers, further increases in projected out-year budget gaps are likely, which must be closed. The crisis may also pressure provision of services and have quality of life implications.
- Coastline location and associated exposure to climate change related to rising sea levels and intensifying storms.
Rating Sensitivities
For Upgrade
- Maintenance of the City’s sound fiscal posture, revenue resiliency and employment growth trend in the face of prevailing economic and social headwinds.
- Adoption of guidelines for target size of reserves and conditions for withdrawal.
- Reduction in out-year budget gaps.
For Downgrade
- Secular economic decline and/or deterioration in a key economic segment, such as commercial real estate, of sufficient magnitude to challenge budgetary revenues.
- Relaxation of, or less adherence to, well-established policies and procedures.
To access rating and relevant documents, click here.