KBRA Assigns AA+ Rating to Various Series of General Obligation Bonds of the City of New York, NY; Affirms Rating for Parity Bonds

KBRA assigns a long-term rating of AA+ to the City of New York, NY Tax-Exempt General Obligation Bonds, Fiscal 2025 Series G Subseries G-1; Taxable General Obligation Bonds, Fiscal 2025 Series H; and Tax-Exempt General Obligation Bonds Fiscal 2012 Series D, Subseries D-3A. KBRA additionally affirms the long-term rating of AA+ for the City's outstanding General Obligation Bonds. The rating Outlook is Stable.

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 City’s currently strong fiscal position and ongoing ability to achieve budgetary balance while maintaining essential quality of life programs and services would be compromised in the event of significant federal funding reductions or changes in federal policy. The Financial Plan does not address the potential for adverse federal action relating to funding declines.
• Federal immigration reforms have the potential to shrink the City’s population and labor market with negative implications for the larger economic outlook despite a potential salutary effect on expenditures.
• The City’s location and topography create exposure to rising sea levels, coastal and inland flooding and extreme heat, the mitigation of which is expected to entail substantial long-term city, state, and federal investment.

Rating Sensitivities

For Upgrade

• Maintenance of sound fiscal posture, budgetary flexibility, employment growth and revenue resiliency in the face of prevailing economic, policy, and social headwinds.
• Adoption of a formalized reserve policy targeting the size of reserves and conditions for deposits and withdrawals
• Formalization, through incorporation to the City Charter, of the City’s policy of limiting debt service to 15% of tax revenues in each year of the financial plan.
• Trend of reduced or eliminated projected out-year budget gaps.

For Downgrade

• Secular economic decline and/or deterioration in a key economic segment, of sufficient magnitude to challenge budgetary balance.
• Relaxation of, or less adherence to, well-established policies and procedures.

To access ratings 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.

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), one of the major credit rating agencies (CRA), is a full-service CRA 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 (DRO) by the Ontario Securities Commission for issuers of asset-backed securities to file a short form prospectus or shelf prospectus. KBRA is also recognized as a Qualified Rating Agency by Taiwan’s Financial Supervisory Commission and is recognized by the National Association of Insurance Commissioners as a Credit Rating Provider (CRP) in the U.S.

Doc ID: 1008940

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