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A Recovery for All of Us: Kroll Bond Rating Agency Assigns AA+ Rating to New York City's General Obligation Bond Credit Outlook

July 14, 2021

First time rating confirms the City’s sound fiscal recovery strategy and strong economic outlook 

NEW YORK—Mayor Bill de Blasio today announced the Kroll Bond Rating Agency (KBRA) has assigned an AA+ rating with a Stable Outlook to New York City’s General Obligation bonds. This is KBRA’s second highest rating, the same that it has assigned to New York State, and the first time the agency has reviewed and rated the City’s bond offerings.  Like recent upward revisions in outlook from Moody’s Investor Services and Standard & Poor’s Global Ratings, this rating reflects confidence in the city’s economic outlook along with strong financial planning and management in the face of severe budgetary stress. 

“This is even more proof that New York City is resilient and on the path to recovery,” said Mayor Bill de Blasio. “A recovery for all of us means investing in our people, staying fiscally responsible, and building the right foundation for a post-COVID economy.”  

In assigning the new rating KBRA praised the New York City as a center of business and culture with a diverse and resilient economy, manageable debt obligations, strong budget controls, and plans for near-term financial challenges, all which have allowed the city to navigate through the pandemic-driven financial crisis towards recovery. 

KBRA also expressed support for city’s long term financial and capital planning, and highlighted that pension funded ratios and unfunded liabilities have trended positively, while debt service is maintained below 15% of City tax revenues, a hallmark of responsible debt finance. 

On May 19 S&P revised its outlook to stable on New York City’s general obligation (GO) bonds and affirmed the AA rating assigned to its outstanding GO debt.  S&P based its revision on the city’s successful vaccination efforts, receipt of more than $15 billion in stimulus that is invested in the current financial plan, and budget actions including the restoration of $1.6 billion in budget reserves through the Retiree Health Benefits Trust 

The S&P revision came shortly after Moody’s Investor Services May 14 action to raise the city’s GO bond credit outlook to stable and affirmed actions the City has taken to maintain fiscal stability in response to the crisis brought on by COVID-19, the greatest budgetary stress test the city has faced in generations. Moody’s highlighted the role of City’s vaccination program, stressed that high vaccination rates as compared with the US overall will drive confidence in the local economy, and noted the positive effect that the city’s accelerating reopening will have on employment and tax revenues. 

In June, Mayor de Blasio and the City Council announced an agreement on the Recovery Budget, an on-time balanced City budget for Fiscal Year 2022 (FY22). The foundation for the $98.7 billion Recovery Budget is the strategic investment of stimulus funds that will drive New York City’s economic comeback and build a recovery for all of us. The Budget is fiscally responsible with $5.1 billion in budget reserves. The Adopted Budget also includes almost $4.0 billion in savings over Fiscal Years 2021 and 2022 since last June – the second largest two-year savings total at Budget Adoption of this administration. 

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