Governor Andrew Cuomo’s three straight on-time budgets, which cut more than $13 billion in deficits, raised New York’s credit outlook to positive at Moody’s Investors Service.
The company’s Aa2 rating, third highest, on the state’s general-obligation debt may rise if Cuomo, 55, and the legislature can keep passing balanced budgets on time, Moody’s said yesterday. In March, lawmakers approved a third consecutive spending plan before the April 1 deadline for the first time since 1984. The Democrat took office in January 2011.
The positive outlook “is another strong affirmation of the progress we have made to put New York’s fiscal house in order,” Cuomo said in a statement. “After years of late budgets and legislative gridlock, we have been able to show that New York State is working again.”
The change by Moody’s, from a stable outlook on the state, follows a similar move by Standard & Poor’s last year, when it put New York on notice that it may score its highest credit rating since 1972 by passing a fourth straight on-time budget. Cuomo, who’s seeking re-election next year, closed deficits in part by getting unions to agree to wage freezes. Moody’s also cited the state’s well-funded pensions in its statement.
New York general-obligation bonds maturing in March 2027 traded at an average yield of 3.48 percent yesterday, 0.09 percentage point below a benchmark index of debt with similar maturity, data compiled by Bloomberg show. That’s a reversal from when the bonds priced March 7 at an average yield of 2.44 percent, 0.16 percentage points above the index, as investors demanded more yield than top-rated securities to buy the debt.
Securities sold by issuers in the state of New York are losing value at a slower pace than the broader $3.7 trillion municipal-bond market. Bonds issued in New York have lost 4.7 percent in 2013 compared with 4.94 percent for the muni market, S&P total return data show.