March 7 (Bloomberg) -- New York sold about $559 million in general-obligation bonds, its biggest sale in two years, as the state is poised to receive its best credit rating since the 1970s.
A $337 million tax-exempt portion included debt maturing in March 2023 that priced to yield 2.15 percent, according to three people familiar with the results. That was about 0.31 percentage point more than benchmark munis, data compiled by Bloomberg show.
Standard & Poor’s rates the state AA, third-highest. In August, the New York-based company revised to positive from stable the outlook on the state’s general-obligation grade. The move means New York could earn its highest rating since it was cut to AA from AAA in 1972. S&P affirmed the positive outlook for today’s sale, citing on-time and balanced budgets.
Governor Andrew Cuomo proposed a $136.5 billion spending plan in January that closed a $1.35 billion deficit with no new taxes and with lowered spending for some local-assistance programs. When the proposal was updated last month, it included an additional $500 million gap created by a cut in federal reimbursement for Medicaid payments covering the state’s most seriously disabled. To help close it, the governor proposed reducing spending on some programs for the disabled.
The 55-year-old Democrat is seeking his third-straight on-time budget, with lawmakers planning to approve a spending plan by March 21, which would be the earliest since 1983. In his first two years, Cuomo closed more than $12 billion in deficits with the first consecutive on-time budgets since 2006 in part by winning wage freezes from the state’s biggest unions.
The S&P outlook “validates the many reforms my administration has put in place since 2011 that resulted in on-time budgets, lower taxes for the middle class, and more efficient and effective state government,” Cuomo said in a statement e-mailed yesterday.
“This continued momentum and the creation of over 115,000 private-sector jobs last year alone, with new jobs being added every day, has put New York on the path to fiscal stability and economic prosperity,” he said.
New York issuers have sold about $5.2 billion this year through March 1, second only to California, according to data compiled by Bloomberg.
The extra yield demanded on general-obligations from the state and its localities narrowed to 0.22 percentage point last month, matching the lowest since October 2009, data compiled by Bloomberg show.
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