The City of New York issued $965 million in taxable bonds to reimburse spending on affordable housing and make capital improvements.
The city sold the bonds in two series. The Subseries B-1 securities, consisting of $700 million, are term bonds that mature on October 1, 2053 and yield 5.828%. The Subseries B-2 bonds, consisting of $265 million, mature between 2025 and 2038, paying interest between 5.269% and 5.975%. The securities received a rating of Aa2 from Moody’s Investors Service, AA from S&P Global Ratings, AA from Fitch Ratings, and AA+ from Kroll Bond Rating Agency.
“The city experienced record revenue performance and strong recovery coming out of the pandemic, as well as improvement in reserve levels, which will help management navigate through future economic downturns, including near-term challenges due to an expected deceleration of revenue growth, rising labor and asylum seeker costs and other uncertainties associated with a high inflationary environment,” Fitch analysts wrote.
The issuance comes amid a historic surge in asylum seekers in New York, which has put intense pressure on the city’s shelter system. More than 100,000 asylum seekers have passed through the system, New York City Mayor Eric Adams announced in August.
That has exacted a heavy cost on New York’s finances. The city anticipates spending $4.7 billion on the “asylum crisis” this fiscal year, and up to $12 billion over the next three years if circumstances do not change. City officials have called for an increase in state and federal aid to manage the influx of migrants.
“This is a national crisis that demands solutions that extend beyond our city, and New York City cannot continue to manage largely on our own,” Adams said.
The bonds are general obligations of the city, backed by its full faith and credit.
Barclays Capital Inc, Citigroup Global Markets Inc, and Morgan Stanley & Co LLC served as lead underwriters on the issuance.