The New York State Development Corporation issued $1.06 billion in bonds to finance a variety of capital improvement projects.
The bonds mature between 2025 and 2053, yielding between 3.66% and 5.03%. The securities received a rating of AA+ from Fitch Ratings and Aa1 from Moody’s Investors Service.
The rating “is based on the solid growth prospects for dedicated sales tax revenue and on structural features that provide superior resilience relative to potential cyclicality,” Fitch analysts wrote.
The issuance follows calls from watchdog groups for greater transparency on economic development projects run by the corporation, which is better known as Empire State Development (ESD). The agency has spent billions of taxpayer dollars in recent years on subsidies for projects including Moynihan Train Hall at New York’s Penn Station and upstate semiconductor factories run by Micron Technology, Inc.
In July, the good government group Reinvent Albany released a report recommending several reforms for the agency, with a focus on transparency, oversight, governance, and ethics. “We understand that the Governor and Legislature use ESD to oversee the misguided and discredited subsidy programs that they concoct,” the report reads.
The bonds are special obligations of the corporation and payable by half of the revenue from state sales taxes. New York charges a 4% state sales tax, which generates about 17% of the state’s operating funds tax revenue.
Wells Fargo Bank, NA, Morgan Stanley & Co LLC, and J.P. Morgan Securities LLC won separate competitive bids for the bonds. They purchased the securities at an aggregate price of $1.09 billion, reflecting a premium of $27.5 million and a discount of $1.5 million.