BAKU, Azerbaijan, October 8. Fitch Ratings
assigned an ‘AA’ rating to $3.42 billion of New York City’s general
obligation bonds on October 2, 2026, while maintaining a Negative
Outlook on the city’s credit, according to the agency.
Trend‘s
calculations show that the five bond series covered by the action –
$1.5 billion of tax-exempt Series D, $470.58 million of tax-exempt
Series E-1, $51.65 million of taxable Series E-2, $24.43 million of
taxable Series F, and $1.375 billion of taxable Series G – total
approximately $3.422 billion. The Series D, E and F bonds are
scheduled to price through negotiation on October 5 and 6, while
the Series G bonds are scheduled to price on October 13 and 14.
“The Negative Outlook reflects the potential for sustained
weakening of the city’s financial resilience and uncertainty around
projected expenditure savings and gap-closing solutions exclusive
of reserve use,” the agency says.
The agency noted that New York City closed its fiscal 2027
budget gap through a combination of recurring and non-recurring
revenues without drawing down reserves, while carryforward
surpluses are declining despite continued year-on-year revenue
growth.
The city has proposed a minimum-reserves balance policy, subject
to voter approval in November, which Fitch said it would view
positively. Fitch’s model places New York City’s implied rating at
8.64 on its numerical scale, within the 8.0-to-9.0 range
corresponding to an ‘AA’ rating. The agency assessed the city’s
financial resilience at ‘aa’, based on a ‘High’ revenue control
assessment and a ‘Midrange’ expenditure control assessment. Fitch
also noted that the city’s current fund balance-to-expenditure
ratio of 9.4% was the lowest recorded during the 2021-2025
period.
Fitch assessed New York City’s long-term liability burden as
‘Weak’, citing liabilities equivalent to 154.2% of governmental
revenue and 23.5% of personal income. According to Trend’s
calculations, the first measure is approximately 6.6 times the
second, reflecting the different bases used by Fitch to assess the
city’s long-term liability burden.
On demographics, Fitch cited an estimated population of
8,584,629 in 2025, down from 8,596,825 in 2024. According to
Trend‘s calculations,
this represents a year-on-year decline of approximately 0.14%,
compared with the negative 0.3% 10-year average annual trend Fitch
used in its assessment of the city’s population trend.
The agency also noted that New York City’s unemployment rate
stood at 120.9% of the national rate. According to Trend’s
calculations, this implies a city unemployment rate of
approximately 5.2%, compared with a national rate of 4.3%.
Fitch said factors that could lead to a revision of the outlook
to Stable include credible plans for resolving out-year budget gaps
through primarily recurring fiscal measures and maintaining
reserves at no less than 7.5% of general fund spending. The agency
said an upgrade could be supported by an approximate 35% decrease
in long-term liabilities and carrying costs, while a downgrade
could follow an approximate 40-to-50% sustained increase in such
liabilities, assuming other factors remain constant.
