OREANDA-NEWS. S&P Global Ratings assigned its 'AA' long-term rating and stable outlook to New York City's fiscal 2017 series A (tax-exempt subseries A-1 and taxable subseries A-2 and A-3) general obligation (GO) bonds. We understand officials plan to use proceeds for capital purposes. S&P Global Ratings also assigned its 'AA' rating to the city's fiscal 2017 series 1 GO bonds based upon the expected conversion of the fiscal 1994 series C and subseries E-2 adjustable-rate bonds to the fixed-rate mode on Aug. 18, 2016. Concurrent with the issue of the subseries A-1, A-2, and A-3 fixed-rate bonds and conversion of the fiscal 1994 series C and subseries E-2 adjustable-rate bonds, the city plans to issue fiscal 2017 subseries A-4 through A-7 multimodal variable-rate bonds to raise $382 million.

S&P Global Ratings affirmed its 'AA' long-term rating on New York City's GO debt outstanding and its 'AA-' rating on the city's lease revenue bonds. The city's faith, credit, and unlimited ad valorem pledge secure the GO bonds, while the lease revenue bonds are subject to annual appropriation. Bondholders also benefit from the security of the general debt service fund, with city real estate tax revenue deposited into the fund and retained under a statutory formula in an amount sufficient to cover debt service.

S&P Global Ratings also affirmed its 'AA-' rating on the Dormitory Authority of the State of New York's (DASNY) lease revenue bonds outstanding based on the city's appropriation pledge. A state aid intercept mechanism further secures the DASNY bonds. In addition, S&P Global Ratings affirmed its 'A+' rating on the New York City Health & Hospitals Corp.'s (HHC) health system bonds based on the city's moral obligation pledge, although the bonds are additionally secured by a pledge of health care reimbursement revenues. We believe the HHC is essential to the city's health care infrastructure, in particular, its Medicaid population, and its medically underserved areas and, as such, we rate the bonds two notches below the GO debt rating rather than the customary three notches.

Finally, S&P Global Ratings affirmed its dual ratings on various issuances where the short-term ratings are based on the liquidity support provided by various financial institutions.

"The stable outlook on the long-term ratings reflects the city's deep and diverse economy and status as the nation's largest employment center," said S&P Global Ratings credit analyst Hilary Sutton. "Strong and tested financial management policies and practices further support the rating."

The 'AA' GO rating reflects our view of New York City's:Strong economy, with access to a broad and diverse metropolitan statistical area (MSA);Adequate budgetary performance, with break-even operating results in the general fund but an operating deficit at the total governmental fund level in fiscal 2015;Very strong management and historically conservative budgeting practices; Strong budgetary flexibility despite limitations on the city's ability to maintain general fund reserves under the Financial Emergency Act, which New York City has adjusted for by using surplus to prepay subsequent-year expenditures and fund a reserve for future retirees' health insurance costs;Very strong liquidity with access to external liquidity we consider exceptional; andVery strong institutional framework score. These strengths are offset, in our view, by the city's very weak debt profile and its large pension and other postemployment benefit(OPEB) obligations, and the lack of a plan to sufficiently address the OPEB obligation.