The hits to New York’s credit continued late Tuesday night as Fitch Ratings downgraded the city’s general obligation bonds and its issuer default rating to AA-minus from AA.
Earlier in the day, S&P Global Ratings
Fitch, which retained its negative outlook, predictably cited the city’s prolonged exposure to the COVID-19 pandemic.
Fitch expects “that the impact of the coronavirus and related containment measures will have a longer-lasting impact on New York's economic growth than most other parts of the country.”
Fitch also referenced the weak rebound to date in employment, real estate transactions, tourism and mass transit usage.
“Very low rates of employees returning to offices and the potential for a longer-term trend of lower office usage could [intensify] current economic pressures on the city's credit profile,” Fitch said.
Exceptionally strong budget monitoring and controls, according to Fitch, support expectations for an adequate level of financial resilience through the current and future downturns
Pressure to increase capital spending is an ongoing concern, according to Fitch.
Both Gov. Andrew Cuomo and Mayor Bill de Blasio have warned more pandemic restrictions could come within days. Measures could include renewed shutdowns of indoor dining and non-essential businesses such as gyms.
“It's important to recognize that we've gone through a really tough stretch here over the last few weeks,” de Blasio told reporters earlier Tuesday. “And unless there is some evidence that that is going to change rapidly, unfortunately restrictions are needed to protect us all. So, we're constantly talking to the state about this.”
De Blasio has repeatedly called for another round of federal aid to the city, and increased borrowing authority from New York State. His
The city has received multiple hits from bond ratings since the pandemic escalated in March. Its last downgrade came on Oct. 1, when Moody’s Investors Service lowered city GOs to Aa2 from Aa1.
According to data on the Municipal Securities Rulemaking Board's EMMA website, a block of Series 2012A general obligation bonds maturing in 2028 that originally priced at 107.733 cents on the dollar and a 5% coupon, sold to a customer Tuesday night at a price of 102.812 cents.
Fitch assigned an AA-minus rating to the city’s roughly $1.4 billion GO bonds, fiscal 2021 Series D and $114 million GO bonds, fiscal 2021, Series E. Both series are taxable.
The city expects to price the negotiated refunding bonds on Dec. 16 through an underwriting syndicate led by book-running lead manager Jefferies, with Loop Capital and Siebert Williams Shank as co-senior managers. Maturities for the Series D and E bonds will run through 2036 and 2028, respectively.
In addition, Fitch has downgraded its ratings on the following obligations, which the city supports through its commitment to appropriate for debt service:
- Roughly $582 million Hudson Yards Infrastructure Corp. revenue bonds, first indenture fiscal 2012 Series A to A-plus from AA-minus, and $2.1 billion Hudson Yards revenue bonds, second indenture fiscal 2017 Series A and Series B (taxable) to A from A-plus.
- About $30 million of special revenue bonds (New York City-New York Stock Exchange Project) Series 2019A and bank bonds associated with $30 million in special revenue bonds (New York City-New York Stock Exchange Project) Series 2004B, issued by the New York City Industrial Development Agency, to A-plus from AA-minus.
