OREANDA-NEWS. Fitch Ratings has assigned an 'AA' rating to bank bonds associated with the following New York City general obligation (GO) bonds:

--$74,060,000 fiscal 2008, series J, subseries J-8 (adjustable rate bonds).

The Rating Outlook is Stable.

The rating is being assigned in connection with the execution of a reimbursement agreement with Sumitomo Mitsui Banking Corporation, acting through its New York Branch. The bank will issue a letter of credit supporting the above-referenced bonds pursuant to the terms of such reimbursement agreement. The letter of credit has an effective date of March 29, 2016 and expires on Aug. 2, 2021. For more information on the bonds, see 'Fitch to Revise L-T Rtg to 'AAA' & Assign S-T 'F1' Rtg to $74MM NYC GOs Fiscal 2008 Subseries J-8,' available at www.fitchratings.com.

Based on a review of the terms governing bank bonds specified in the agreement, it is Fitch's opinion that the incremental risk associated with bank bonds does not have a material impact on the long-term credit rating.

SECURITY

The GO bonds are secured by a pledge of the city's full faith and credit and the levy by the city of ad valorem taxes without limit as to rate or amount on all real property within the city subject to taxation. The city is not subject to New York State's property tax cap.

KEY RATING DRIVERS

HIGHLY EFFECTIVE BUDGET MANAGEMENT: Fitch's 'AA' rating reflects the city's tight budget monitoring and control as demonstrated by its ability to achieve consistent balance and manage out-year gaps.

ADEQUATE CUSHION: While the city does not carry a large fund balance, growing budgetary reserves and expense prepayments provide adequate protection against unforeseen conditions.

SOLID ECONOMIC UNDERPINNINGS: The city has a broad economic base and serves a unique role as a national and international center for commerce, culture, and tourism. The city's diverse revenue structure captures most economic activity but is vulnerable to variability in the financial services industry.

HIGH LONG-TERM LIABILITIES: Fitch anticipates a continued high burden of debt and other long-term liabilities given the city's significant expected future tax-supported issuance and large post-employment obligations. Fitch expects the burden on the budget of long-term liabilities will remain elevated but fairly stable.

RATING SENSITIVITIES

BUDGET BALANCE CRUCIAL: Given the modest level of fund balance, the rating is sensitive to the city's ability to continue to address budget imbalances and demonstrate financial flexibility through sizable budgetary reserves and prepayments of future years' expenditures. Fitch expects financial flexibility to increase while the economy and revenues remain strong.

LONG-TERM LIABILITY CONTAINMENT: Fitch remains concerned about the city's large long-term liability burden but expects the burden on the budget to stay manageable. Notable growth in the budget burden associated with these liabilities would reduce overall financial flexibility and negatively affect the rating.