June 12, 2015
CONTACT: Morris Peters


The New York State Division of Budget today announced the successful results of the sale of $1,170,800,000 in New York State Personal Income Tax Revenue Bonds. Investors once again demonstrated high confidence in the direction of New York.  For the fifth consecutive year, New York passed a timely and honestly balanced budget that holds spending growth below two percent, reversing decades of dysfunction.

“Today’s bond sale is further proof that New York State is in its best fiscal position in many years,” State Budget Director Mary Beth Labate said. “With money in the bank, growing reserves and more surpluses on the horizon, Governor Cuomo has given investors reason for confidence.”

The sales were conducted by DASNY (Dormitory Authority of the State of New York), in five tranches and are scheduled to be delivered on June 19, 2015.  All bond proceeds will fund previously authorized capital projects, including the construction of SUNY educational and mental health facilities, environmental infrastructure projects, and EXCEL grants for school construction. The winning bids were as follows:

  • $239,175,000 of Series 2015B (Group A) Tax-Exempt Bonds to J.P. Morgan Securities LLC with a true interest cost bid of 2.148 percent;
  • $391,325,000 of Series 2015B (Group B) Tax-Exempt Bonds to RBC Capital Markets with a true interest cost bid of 3.743 percent;  
  • $413,150,000 of Series 2015B (Group C) Tax-Exempt Bonds to Morgan Stanley & Co. LLC with a true interest cost bid of 4.288 percent;
  • $29,770,000 of Series 2015C Tax-Exempt Bonds to Citigroup Global Markets Inc. with a true interest cost bid of 3.683 percent; and
  • $97,380,000 of Series 2015D Federally Taxable Bonds to J.P. Morgan Securities with a true interest cost bid of 2.791 percent.

“These bonds were sold on a competitive basis which resulted in aggressive bids with favorable rates for the State. Tranching the largest series was an effective way to encourage aggressive bidding,” said Gerrard P. Bushell, DASNY Acting President & CEO.

The positive reaction by the market to New York’s bond offering echoes the positive reception from the rating agencies. In rating the bonds Aa1, Moody’s Investor Services points to New York’s “strong financial management with stable reserves and low unfunded pension liability.” Moody’s gave the bonds a stable outlook, reflecting their “expectations that the State will preserve and improve upon the gains it has made in governance and its financial position.”

Standard and Poor’s gave the PIT Revenue Bonds their highest rating, AAA. In their rating of the bonds, S&P points to New York’s “very strong coverage” and the economic diversity of the State.

The departure from a history of political gridlock reflected in five consecutive timely budgets contributed to the upgrading of New York’s credit rating in 2014 by all three major rating agencies. Moody’s Investor Services upgraded New York’s General Obligation bonds to Aa1, their highest rating of the State since 1964, and Fitch Ratings upgraded New York to AA+, their highest rating ever for the State. Standard and Poor’s upgraded New York’s GO bonds to AA+, their highest rating since 1972.

“New York has reversed historic financial management patterns and now benefits from a sustained record of on-time budgets, contained spending growth, and lack of reliance on external borrowing for liquidity purposes,” said Moody’s Investor Services in their upgrading of New York. “The shift to more moderate spending increases signals a more sustainable approach to state finances.”

The State’s Capital Plan includes $11.2 billion in FY 2016 capital infrastructure spending, appropriately financed through a combination of bonds and pay-as-you-go, as approved by the State Legislature. Improved debt practices and capital management under Governor Andrew M. Cuomo include coordinated capital planning through the NY Works Task Force and the creation of the first-ever 10-year Statewide Capital Plan.

New York State will continue to remain within its debt limit, and measures of debt affordability are steadily improving:

  • In every year of the Capital Plan, the debt to personal income ratio is expected to improve and represent the lowest level the State has recorded in decades.
  • State-related debt outstanding as a percentage of personal income declined from 5.9 percent in FY 2011 to 4.9 percent in FY 2015, and is expected to decrease further to 4.3 percent by FY 2020.
  • Debt outstanding has declined from $55.7 billion in FY 2011 to $54.2 billion in FY 2015. For the first time in over 50 years, debt outstanding declined for three consecutive years (FY 2013 through FY 2015).
  • Over the five-year Capital Plan, debt outstanding is projected to grow by 2.5 percent from FY 2015 to FY 2020. The growth rate is projected at 1.1 percent from FY 2011, when Governor Cuomo took office, to FY 2020. This remains well below the historical growth rate for debt and below inflation.