Release #418-00

MAYOR GIULIANI IDENTIFIES OVER $600 MILLION IN SAVINGS TO THE CITY FROM RECENT RATING AGENCY UPGRADES

Mayor Rudolph W. Giuliani today identified $610 million in debt service savings over the next 40 years, following the recent rating agency upgrades achieved by the City.

"My Administration's strong commitment to fiscal stability and economic growth has been a key factor in the recent rating upgrades from Fitch, Moody's, and Standard & Poor's", said Mayor Giuliani. "Our recent bond sales have demonstrated that these upgrades will save the City millions of dollars in debt service costs long after my Administration has ended."

Since the ratings upgrades on the General Obligation debt of the City, savings of approximately 10 basis points were realized on a recent issuance of City G.O. bonds. One basis point is equal to one-hundredth of a percentage point. At this level of improvement in borrowing cost, the City will save $560 million in debt service costs over the life of the $31 billion of City General Obligation bonds that are expected to be issued to fund the City's current 10-year Capital Improvement Program.

Since recent ratings upgrades of the New York City Transitional Finance Authority (TFA), the TFA has seen a reduction of approximately 5 basis points. Since its first issuance in 1997, the TFA has been the lowest cost issuer in borrowing cost among all major bond issuing entities in New York State. With these rating upgrades, the TFA has shown still further reductions in its borrowing costs. Over the next 40 years, the City will save $50 million in debt service costs over the life of the $5.5 billion remaining in authorized TFA debt issuance.

Since August, the General Obligation Debt of the City has received ratings upgrades from all three major rating agencies. On August 8, Moody's Investors Service (Moody's) increased the rating on the General Obligation credit from A3 to A2, the first rating upgrade for the City General Obligation credit from Moody's in 12 years. Moody's cited the "strength of the City's current financial condition and economy" along with the City's "institutionalized budgetary controls" which "better enable it to weather future cycles."

On September 13, Standard & Poor's (S&P) increased the rating on the General Obligation credit from A- to A. S&P most recently upgraded the general obligations of the City in July, 1998, when the rating was increased from BBB+ to A-. This was the second upgrade awarded by S&P during the Giuliani Administration. S&P cited the City's "strong financial results and steady economic expansion across all sectors."

On September 15, Fitch increased the rating on the General Obligation credit from A to A+. This is the highest rating ever assigned by any rating agency to the general obligation debt of the City. This action was the second time that Fitch has upgraded the City's general obligation credit during the Giuliani Administration. In March, 1999 Fitch raised the City rating from single A- to single A. Fitch noted the "strength and breadth of the City's economic resurgence," as well as the City's "exceptional budget monitoring and management capabilities" among the factors leading to the upgrade.

In addition to the ratings upgrades of the General Obligation credit, the New York City Transitional Finance Authority also received ratings upgrades this Fall from Moody's and S&P. On October 13, Moody's upgraded the TFA from Aa3 to Aa2, citing the "strong legal provisions" protecting bondholders and the "strength of the New York City economy". On October 20, S&P upgraded the TFA from AA to AA+, citing "fundamental strengths and wide reaching expansion exhibited by the City's economy" as well as a "steady trend of increased coverage on the Authority's covenanted maximum annual debt service costs." Fitch rates the TFA at AA+.