NYC Bonds

July witnessed a sobering milestone: Detroit’s filing for Chapter 9 bankruptcy protection, which ranks as the largest municipal bankruptcy in American history. While that event provoked much comment, we’d like to put it in context. Municipal bankruptcies are rare and usually reflect circumstances that are specific to the municipality.  Economic, demographic, and financial factors over several decades brought Detroit to this point.

Unlike Detroit, New York City’s population and economy are growing, we have a diversified economic base, and we recently accomplished our 34th consecutive year of adopting a balanced budget. Like other cities and states, New York City faces the challenge of rising costs in many budget areas, but we have a track record of addressing those costs though our budgets and four-year financial plans.

Extensive information about New York City’s finances is available from the City itself and from independent reviewers. The Comptroller’s website is a good starting point, with links to City budget, cash, and financial reporting documents and to the most recent agency reports on City bonds. The Official Statement for our July General Obligation bond sale (described below) contains a wealth of information about New York City’s government, finances, and economy as of the publication date. The New York State Financial Control Board and The New York City Independent Budget Office, among others, also review and report on New York City’s financial health.

$634 million of General Obligation Bond Sale

Despite severe volatility in the fixed-income market that was exacerbated by Detroit’s filing, New York City successfully accessed the market and sold $634 million of General Obligation (G.O.) bonds the week of July 22.  The sale included $375 million of tax-exempt fixed-rate new money bonds, $125 million of taxable fixed-rate new money bonds, and $134 million of tax-exempt fixed-rate bonds which are being converted from variable-rate demand bonds (“VRDBs”) to fixed-rate bonds.  The City also sold $125 million in taxable fixed-rate new money bonds today via competitive bid.

$372 million of General Obligation Refunding Bond Sale

In addition to the new money and conversion bonds, improving market conditions made it possible to re-enter the market on July 30 and sell some $372 million of refunding bonds.  Strong investor demand allowed us  to reduce yields by one basis point in the 2016 and 2024 maturities, two basis points in the 2018, 2020, and 2021 maturities and four basis points in the 2022 maturity. The refunding achieved budgetary savings of more than $20 million, or more than $17 million on a present-value basis. 

The ratings for New York City General Obligation Bonds are Aa2 from Moody’s Investor Service, AA from Standard & Poor’s and AA from Fitch Ratings.  Each rating has a “stable” outlook.

Looking Ahead

The City does not plan any bond sales until September.

Information on how to buy New York City bonds is available on the Comptroller’s website.  You can subscribe on our website to receive sale announcements and other City publications and reports.  The New York State Comptroller also maintains a website with a preliminary forward calendar for major State and City issuers.

For the next several months, this monthly wrap-up will be posted on our website, but not distributed electronically to subscribers.  Please check the Investor Relations website at the beginning of each month for the wrap-up of the prior month’s activities.  You may still subscribe and start receiving this wrap-up by email in the future.

As always, we appreciate your interest in New York City bonds.  Please contact us if you have any questions or suggestions as to how we can improve our investor communications.

Carol S. Kostik          
Deputy Comptroller for Public Finance