Concurrently, KBRA affirms the AA+ rating and Stable Outlook on the City’s outstanding General Obligation Bonds.
KBRA assigns long-term rating of AA+ with a Stable Outlook to The City of New York’s General Obligation Bonds – Fiscal 2006 Series J, Subseries J-A, Fiscal 2008 Series A, Subseries A-4, Fiscal 2008 Series C, Subseries C-4, Fiscal 2009 Series B, Subseries B-3, and General Obligation Bonds, Fiscal 2024 Series C. Concurrently, KBRA affirms the AA+ rating and Stable Outlook on the City’s outstanding General Obligation Bonds.
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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
- The economic base remains susceptible to financial services sector cycles, although financial sector reliance has moderated with increasing diversification of the City’s economic base.
- The Financial Plan identifies out-year budget gaps, now exacerbated by the asylum seeker crisis, which must be closed.
- Absent significant Federal and/or State funding to assist the City in handling the continuing influx of asylum seekers, further increases in projected outyear budget gaps are likely. 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.
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