NEW YORK--(BUSINESS WIRE)--Fitch Ratings affirms the 'AA-' underlying long-term rating on the following New York City Industrial Development Agency (IDA) bonds as part of its continuous surveillance effort:
--Approximately $99 million outstanding special revenue bonds (New York City-New York Stock Exchange Project).
The Rating Outlook is Stable.
KEY RATING DRIVERS
--The 'AA-' rating is based on the credit quality of the city of New York (general obligations rated 'AA' by Fitch), as bonds are secured by the city's lease rental payments, subject to annual appropriation.
--New York City's advanced, effective budget monitoring and management and conservative revenue forecasting have allowed the city to react quickly to changing conditions and consistently generate operating surpluses before discretionary transfers.
--The city has an extended history of effectively eliminating sizable out-year budget gaps, mitigating risk of the inability to maintain a rainy day reserve.
--The city has a broad economic base and a unique role as a national and international center for commerce and culture. Income levels are high.
--Key revenue streams are closely linked to the cyclical financial services industry and the real estate market.
--The city's debt levels are expected to remain high despite recent action to reduce future borrowing.
--Annual personnel costs, particularly pension contributions, are expected to consume an increasingly large share of general fund resources.
WHAT COULD TRIGGER A RATING ACTION
--Changes to New York City's GO rating, to which this rating is linked.
SECURITY
The bonds are payable under a facility financing agreement, whereby the city agrees to provide for debt service on the bonds, subject to annual appropriation.
CREDIT PROFILE
Security for the bonds derives from annually appropriated payments from the city pursuant to a facility financing agreement. The IDA pledges and assigns to the trustee its rights under the agreement, including the amounts received from the city. The original bonds were issued in 2003 to reimburse the city for initial development costs it incurred for a planned expansion of the New York Stock Exchange that did not proceed.
On or before March 31 of each year, the IDA certifies to the city the amounts payable under the agreement. The city covenants that the mayor will include in the executive expense budget submitted to the city council each fiscal year an appropriation equal to the amounts projected to be payable under the agreement. The agreement also provides that the mayor will seek to increase appropriations during the fiscal year if necessary to pay the amounts due under the agreement. The administration of all city appropriation and lease-backed debt is centralized and treated as a single unit of appropriation in the city's debt service budget.
Once appropriation is made, the city's obligation to pay is absolute and unconditional and not subject to setoff, recoupment or counterclaim. The agreement remains in effect as long as bonds are outstanding. There is no lien or security interest on any property.
For more information on New York City's 'AA' general obligation rating and Stable Rating Outlook, see Fitch Research 'Fitch Rates New York City's $600MM GO Bonds 'AA'; Outlook Stable' dated July 15, 2011, and available at 'www.fitchratings.com'.
Applicable Criteria and Related Research:
--Additional information is available at 'www.fitchratings.com'.
Applicable Criteria and Related Research:
--'Tax-Supported Rating Criteria', dated Aug. 16, 2010;
--'U.S. Local Government Tax-Supported Rating Criteria', dated Oct. 8, 2010.
Applicable Criteria and Related Research:
Tax-Supported Rating Criteria
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=548605
U.S. Local Government Tax-Supported Rating Criteria
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=564566
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