A New York state authority sold more than $1 billion in bonds to finance new buildings and equipment for the state’s schools.
The bonds, which were issued in four series by the Dormitory Authority of the State of New York (DASNY), received a rating of AA- from Fitch Ratings. The Series 2023A bonds, which included over $750 million of the issuance, received a rating of Aa3 from Moody’s Investors Service. The bonds mature between 2024 and 2050, with yields ranging from 2.57% to 3.80%
“There is a constitutional mandate for, and strong history of, state support for education. Program management by DASNY, a key issuer for the state’s capital program, is a credit strength for this pooled financing program,” according to Fitch.
The issuance comes after the passage of New York’s budget for the upcoming fiscal year, which Governor Kathy Hochul signed on May 3 after months of negotiations threatened to delay funding to school districts.
The budget includes $34.5 billion in school aid, the highest-ever state funding to its schools and a 10 percent increase from last year. In 2022, the state collected more than $110 billion in taxes, exceeding budget estimates but reflecting a $9.5 billion decrease from the year prior.
The bonds will consist of special obligations on DASNY and will be payable by 88 participating school districts and a state school aid program. In its rating analysis, Fitch noted that some school districts have historically received insufficient state school aid to make its payments to DASNY.
RBC Capital Markets served as lead underwriter on the issuance, which included an underwriter’s discount of $6.6 million.