Yonkers, New York, issued $82.5 million in bonds to finance a variety of improvements, including to the city’s schools.
The city sold the bonds in two series. The Series 2024A bonds, consisting of $55.7 million, mature between 2026 and 2042, yielding between 2.59% and 3.5%. The Series 2024B bonds, consisting of $26.8 million, mature between 2026 and 2044, yielding between 2.59% and 3.61%. All of the bonds pay interest at 5%.
The securities received an insured rating of AA from S&P Global Ratings, which assigned an underlying rating of A+. Moody’s Investors Service upgraded the underlying credit rating on the city’s bonds to A2 from A3.
“The A2 rating factors an adequate financial position, a growing tax base and a leverage position that is consistent with its peers,” Moody’s analysts wrote.
The Series A bonds will fund a variety of city improvements, with the largest disbursement, about $12 million, funding the replacement of water meters. The Series B bonds will finance school construction.
Despite the upgrade to its credit rating, Yonkers faces headwinds in the coming years. “The city and the school district project large budget gaps over the next three years that will be difficult to close without significant revenue enhancements or expenditure reductions,” according to Moody’s.
Federal funds leftover from COVID-19 pandemic-related disbursements have bolstered Yonkers’ budget since 2020. But with those funds now dried up, the city plans to use its reserves to maintain its budget while it develops new revenue streams. Yet even with the loss of reserves, the city’s bonds will be in A2 standing, according to Moody’s.
The bonds are general obligations of the city, backed by its full faith and credit.
FHN Financial Capital Markets served as lead underwriter on the issuance, purchasing the bonds for $93.1 million. Capital Markets Advisors LLC acted as municipal advisor.