KBRA Assigns AA+ Rating to the City of New York, NY General Obligation Bonds, Fiscal 2025 Series D; Outlook is Stable
2024年9月28日 - 7:46AM
ビジネスワイヤ(英語)
KBRA assigns a long-term rating of AA+ to the City of New York,
NY General Obligation Bonds, Fiscal 2025 Series D, consisting of
Taxable Social Bonds, Subseries D-1 and Taxable Bonds, Subseries
D-2. The Outlook is Stable. Concurrently, KBRA affirms the AA+
rating and Stable Outlook on the City's outstanding General
Obligation Bonds.
The rating assignment and affirmation recognize the City of New
York’s (“the City’s”) preeminent role as a domestic and
international center of business, culture and tourism, the historic
resiliency of its broad and diverse economic base, its elevated,
yet manageable debt profile, management’s track record of fiscal
discipline, and the efficacy of institutionalized procedures in
confronting near-term financial challenges. Counterbalancing these
strengths are continuing, out-year budgetary imbalances due to
ongoing spending pressures, the potential for a near-term slowdown
in employment growth, and a geographic footprint that is
increasingly vulnerable to climate change-driven weather
events.
In a conversation with KBRA prior to the September 25, 2024
indictment of Mayor Eric Adams on federal charges of bribery,
conspiracy, fraud and soliciting illegal foreign campaign
donations, representatives of the mayor’s Office of Management and
Budget (“OMB”) expressed their view that widening developments
related to four federal corruption inquiries, as well as the
resignation of top administration officials, would not disrupt the
work of the more than 300,000 civil servants responsible for the
City’s day-to-day operations. KBRA acknowledges that City
operations should continue unabated and further notes the
considerable experience and stability of OMB and Comptroller’s
office professional staff responsible for the administration of
City finances, debt management and budgeting. However, in our view,
fallout from the indictment may create a serious distraction for
City leaders, with implications for the Mayor’s ability to govern
effectively.
Key Credit Considerations
The rating was assigned because of the following key credit
considerations:
Credit Positives
- New York City’s role as an international business and cultural
center, and its position as the hub of the country’s largest
metropolitan economy highlight the diversity and resilience of the
resource base supporting the Bonds.
- Institutionalized, long-range financial management and capital
planning practices support financial stability.
- Total reserves, pension funded ratios and unfunded liabilities
have trended positively in recent years, while annual debt service
requirements continue to be maintained at below 15 percent of City
tax revenues.
Credit Challenges
- The economic base remains susceptible to financial services
sector cyclicality, though reliance has moderated with increasing
diversification.
- Despite greater clarity regarding plans to address asylum
seeker costs, expenditure pressures are likely to persist,
particularly in the absence of significant Federal and/or State
funding to assist the City in handling a continued influx of asylum
seekers. The crisis may also pressure provision of services, with
quality-of-life implications.
- The City’s location creates exposure to coastal and inland
flooding and extreme heat, the mitigation of which entails
significant city, state, and federal investment over the
long-term.
Rating Sensitivities
For Upgrade
- Maintenance of sound fiscal posture, budgetary flexibility,
employment growth and revenue resiliency in the face of prevailing
economic and social headwinds.
- Adoption of a formalized reserve policy targeting the size of
reserves and conditions for withdrawal.
- Trend of reduced or eliminated projected 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 balance.
- Relaxation of, or less adherence to, well-established policies
and procedures.
To access rating and relevant documents, click here.
Methodologies
- Public Finance: U.S. Local Government General Obligation Rating
Methodology
- ESG Global Rating Methodology
Disclosures
A description of all substantially material sources that were
used to prepare the credit rating and information on the
methodology(ies) (inclusive of any material models and sensitivity
analyses of the relevant key rating assumptions, as applicable)
used in determining the credit rating is available in the
Information Disclosure Form(s) located here.
Information on the meaning of each rating category can be
located here.
Only those ratings on securities issued by this Issuer that also
are denoted on the Security Ratings tab for this Issuer on KBRA.com
as “endorsed” by Kroll Bond Rating Agency Europe Limited into the
European Union and/or by Kroll Bond Rating Agency UK Limited into
the UK are covered by the disclosures set forth in this press
release and the corresponding Information Disclosure Form. No other
ratings on issuances by this Issuer have been endorsed into the
European Union or the UK, and the disclosures set forth herein and
in the corresponding Information Disclosure Form are inapplicable
to those ratings and may not be used for regulatory purposes by
European Union or UK investors in these securities.
Further disclosures relating to this rating action are available
in the Information Disclosure Form(s) referenced above. Additional
information regarding KBRA policies, methodologies, rating scales
and disclosures are available at www.kbra.com.
About KBRA
Kroll Bond Rating Agency, LLC (KBRA) is a full-service credit
rating agency registered with the U.S. Securities and Exchange
Commission as an NRSRO. Kroll Bond Rating Agency Europe Limited is
registered as a CRA with the European Securities and Markets
Authority. Kroll Bond Rating Agency UK Limited is registered as a
CRA with the UK Financial Conduct Authority. In addition, KBRA is
designated as a designated rating organization by the Ontario
Securities Commission for issuers of asset-backed securities to
file a short form prospectus or shelf prospectus. KBRA is also
recognized by the National Association of Insurance Commissioners
as a Credit Rating Provider.
Doc ID: 1006147
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Analytical Contacts
Linda Vanderperre, Senior Director (Lead Analyst) +1
646-731-2482 linda.vanderperre@kbra.com
Peter Scherer, Senior Director +1 646-731-2325
peter.scherer@kbra.com
Karen Daly, Senior Managing Director (Rating Committee Chair) +1
646-731-2347 karen.daly@kbra.com
Business Development Contacts
William Baneky, Managing Director +1 646-731-2409
william.baneky@kbra.com
James Kissane, Senior Director +1 646-731-2380
james.kissane@kbra.com