Kroll Bond Rating Agency assigned its AA-plus rating to New York state general obligation bonds in its first ever rating of the Empire State.
"Kroll Bond Rating Agency was added to this general obligation pricing to broaden the pool of information available to investors regarding the state's credit," said Mark Johnson, spokesman for Comptroller Thomas DiNapoli.
New York is the third state to get a Kroll rating, joining Connecticut and Wisconsin.
Kroll said it now rates 117 public finance credits, including Los Angeles, Dallas/Fort Worth International Airport, the Triborough Bridge and Tunnel Authority and the New York State Housing Authority.
The rating was released Tuesday, the day New York competitively priced $330 million of GO bonds.
"The stable outlook reflects KBRA's expectation that the State will maintain its commitment to achieving ongoing budgetary balance through continued control in spending growth and limited use of non-recurring revenues," said Kroll senior director Alessandra D'Imperio.
New York also received rating affirmations at AA-plus from Standard & Poor's and Fitch Ratings, and at Aa1 from Moody's Investors Service.
Proceeds of the Series 2015A tax-exempts and the Series 2015B taxables will be used to finance capital expenditures for environmental and transportation purposes throughout the state.
Kroll, in its report released Tuesday morning, said New York is projected to end the 2015 fiscal year with an operating surplus of $525 million, which would bring its general fund balance to $2.37 billion. The state plans to deposit $315 million of its surplus for its rainy day fund and bring the total reserve balance to $1.8 billion. In addition, New York is planning to use $5.4 billion of bank settlement funds toward infrastructure projects.
Kroll said New York could get a rating upgrade if the state maintains focus on "structurally balanced budgets", increases rainy day reserves to the maximum allowed by state law and diversifies its economy so it is not as dependent on the financial services sector. The state's rating could go down if the state has an ongoing use of non-recurring revenues to maintain budgets and if reserves get depleted.
New York had outstanding state-supported debt equal to $52.6 billion as of Dec. 31, 2014 with a projection to increase this figure to $55 billion for the 2016 fiscal year, according to Kroll. The state ranks fourth in the nation in debt per capita at $2,677.
"State-supported debt levels have been relatively flat over the last few years and have actually declined as a percentage of personal income as income levels have increased," said D'Imperio. "These debt levels reflect the State's provision of a high level of health and social services relative to other states."
