The Dormitory Authority of the State of New York (DASNY) issued $2.89 billion in bonds to finance various capital projects.
The authority sold the bonds in two series. The tax-exempt Series 2024A bonds, consisting of $2.81 billion, mature between 2026 and 2054, yielding between 2.64% and 4.22%. The federally taxable Series 2024B bonds, consisting of $64.8 million, mature between 2025 and 2030, paying interest at rates between 4.579% and 5.113%. The securities received a rating of Aa1 from Moody’s Investors Service, AA+ from Fitch Ratings, and AAA from Kroll Bond Rating Agency.
The rating “reflects the contingent nature of the appropriation requirement for debt service, offset by the essentiality of projects financed by the bonds and the very strong incentive to appropriate,” Moody’s analysts wrote.
The issuance comes as New York’s economy steadies after it was upended by the COVID-19 pandemic. Expanded government relief programs during the pandemic led more people to file taxes, increasing New York’s personal income tax revenue. New York collected $55 billion in personal income taxes in fiscal year (FY) 2021, followed by $70 billion in FY 2022 and $59 billion in FY 2023, according to the state’s department of taxation and finance.
Personal income taxes form New York’s largest source of revenue.
DASNY finances, designs, and builds health and education infrastructure, according to its website. The Series 2024 proceeds will finance “certain programs and projects” in New York, according to the bond documents. The bonds are special obligations of the authority, payable by revenue from personal income taxes.
RBC Capital Markets LLC served as lead underwriter on the issuance, purchasing the bonds for $3.2 billion. The price reflected a premium of $332 million.