Ratings agency KBRA awards AA+ score and maintains stable forecast to New York City's municipal bonds, backed by the city's general obligations.
City of New York's General Obligation Bonds Maintain AA+ Rating with Stable Outlook
The City of New York's General Obligation (G.O.) Bonds have been assigned a long-term rating of AA+ with a Stable Outlook by Kroll Bond Rating Agency (KBRA), a major credit rating agency registered with the U.S. Securities and Exchange Commission as an NRSRO.
As of April 7, 2025, the key credit considerations for the City's G.O. Bonds include:
- Security Structure: The G.O. Bonds are secured by the City’s faith and credit pledge, meaning all taxable real property in the City is subject to unlimited ad valorem taxation to pay debt service on these bonds.
- Debt Burden: At June 30, 2025, approximately $46.72 billion of G.O. Bonds were outstanding, indicating a significant debt burden but backed by strong taxing authority.
- Debt Service Fund: The City has established a general debt service fund per the Financial Emergency Act, which supports the timely payment of debt service.
- Strong Credit Quality: KBRA assigned the AA+ rating to the City's Fiscal 2026 Series A, B, and C G.O. Bonds, reflecting strong credit quality.
- Tax Base: The rating stability and strength derive from the City’s substantial and diverse tax base supported by its broad-based property tax levy without limitation as to rate or amount.
These elements highlight the strong security structure and management practices undergirding the City’s G.O. Bonds, justifying KBRA’s AA+ rating and stable outlook as of mid-2025.
Moreover, the City's financial position has been bolstered by upwards revisions to forecast tax revenues, asylum seeker savings through FY 2027, and decreases in pension contributions through FY 2028, contributing to near-term budgetary stability.
However, material risks to the City's FY 2026 Financial Plan include potential reductions in federal categorical grant funding and spending cuts included in the One Big Beautiful Bill Act (OBBBA).
As for the rating action, further disclosures can be found in the Information Disclosure Form(s) referenced above, which can be accessed here. The Document ID for this rating action is 1010557.
KBRA is recognized by the National Association of Insurance Commissioners as a Credit Rating Provider (CRP) in the U.S. and is designated as a Designated Rating Organization (DRO) by the Ontario Securities Commission for issuers of asset-backed securities. KBRA is also registered as a CRA with the European Securities and Markets Authority, the UK Financial Conduct Authority, and the Taiwan's Financial Supervisory Commission.
For more information about KBRA's policies, methodologies, rating scales, and disclosures, visit www.kbra.com. Analytical Contacts at KBRA include Linda Vanderperre, Peter Scherer, Douglas Kilcommons, William Baneky, and James Kissane.
[1] The meaning of each rating category can be found here. [2] The Information Disclosure Form(s) for the credit rating can be found here.
- The City's General Obligation Bonds, which have a strong security structure and timely debt payment support from the debt service fund, are a potentially attractive investment opportunity in the realm of personal-finance and business, mirroring KBRA's AA+ rating and stable outlook.
- The financial performance of the City of New York, bolstered by rising tax revenues and savings from asylum seekers and pension contributions, has contributed to a stable financial position, enhancing the appeal of investing in its General Obligation Bonds.
- Despite the near-term budgetary stability, there are potential risks, such as reductions in federal funding and spending cuts due to acts like the OBBBA, which could impact the City's financial compliance and investment outlook.
- Prospective investors in the City's General Obligation Bonds should carefully evaluate their risk tolerance and consider consulting with a financial advisor or professional to assess both the opportunities and challenges associated with investing in these bonds, given the complexities surrounding federal grant funding and proposed legislation.
