KBRA Assigns AA+ Rating, Stable Outlook to the City of New York General Obligation Bonds
2 Oct 2026 | New York
KBRA assigns a long-term rating of AA+ with a Stable Outlook to the following City of New York General Obligation Bonds (the Bonds):
- Fiscal 2027 Series D (Tax-Exempt)
- Fiscal 2027 Series E consisting of Subseries E-1 (Tax-Exempt) and Subseries E-2 (Taxable)
- Fiscal 2027 Series F (Tax-Exempt)
- Fiscal 2027 Series G (Taxable)
Proceeds of the Fiscal 2027 Series D (Tax-Exempt) Bonds will be used for capital purposes. Proceeds of the Fiscal 2027 Subseries E-1 (Tax-Exempt) Bonds, Fiscal 2027 Subseries E-2 (Taxable) Bonds and Fiscal 2027 Series F (Tax-Exempt) Bonds will be used, together with other funds of the City to refund certain outstanding General Obligation Bonds. Proceeds of the Fiscal 2027 Series G (Taxable) Bonds will be used for capital purposes. Proceeds of the Bonds will also be used to pay certain costs of issuance.
As of June 30, 2026, approximately $52.74 billion General Obligation Bonds were outstanding, secured by the City's faith and credit pledge. All City taxable real property is subject to the levy of ad valorem taxes, without limitation as to rate or amount, for payment of debt service. Pursuant to the Financial Emergency Act for the City of New York, a general debt service fund (the Fund) is established for General Obligation Bonds and certain notes. Payments of the City real estate tax must be deposited into the Fund upon receipt and retained under a statutory formula. Since its inception in 1978, the Fund, which is held by the State Comptroller as Custodian, has been fully funded at the beginning of each payment period.
A detailed discussion of key rating determinants pertaining to the City of New York General Obligation Bonds is provided in prior KBRA reports, the most recent of which is dated August 3, 2026.
Key Credit Considerations
The rating actions reflect the following key credit considerations:
Credit Positives
- The City’s role as an international business and cultural center and hub of the country’s largest metropolitan economy highlights the diversity and resilience of the resource base supporting the G.O. Bonds.
- Pension funding metrics are favorable, and pension governance is institutionalized.
- Budget transparency has improved, reducing the risk that predictable recurring costs will re-emerge as midyear budget shocks.
Credit Challenges
- Significant long-term structural budgetary imbalance persists, driven by recurring spending for programs with rapidly growing costs, such as rental assistance, non-asylum shelter costs, DOE due process cases, class-size implementation, SNAP administrative funding cuts and overtime.
- The FY 2027 Adopted Budget's reliance on one-time or temporary resources, expense write-downs, and expenditure delays contribute to future structural imbalance.
- Federal funding and policy risks remain material fiscal overhangs.
Rating Sensitivities
For Upgrade
- Adoption of a formalized reserve policy targeting reserve size and conditions for deposits and withdrawals.
- Maintenance of sound revenue resiliency in the face of prevailing policy and economic headwinds.
- Trend of decline in projected out-year budget gaps as a function of an increase in recurring revenues and/or a decline in recurring expenditures.
- 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.
For Downgrade
- Budgetary instability, significant depletion of reserves or materially increased out-year budget gaps.
- Relaxation of, or diminished adherence to, well-established policies and procedures.
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