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

--$111,225,000 multi-modal bonds fiscal 2008 subseries J-6;

--$25,000,000 adjustable rate bonds fiscal 2012, series A, subseries A-3.

The Rating Outlook is Stable.

The ratings are being assigned in connection with the execution of an amended and restated standby bond purchase agreement(fiscal 2008 subseries J-6) and a reimbursement agreement (fiscal 2012, series A, subseries A-3) with Landesbank Hessen-Thuringen Girozentrale, acting through its New York Branch (the bank). Pursuant to the terms of the reimbursement agreement for the fiscal 2008 subseries J-6 bonds, the bank has issued an amendment and restatement of the original letter of credit as credit support for those bonds. The reimbursement agreement and letter of credit for the fiscal 2008 bonds, as well as the standby bond purchase agreement for the fiscal 2012 bonds, expire on Dec. 14, 2020.

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: The key credit strength underpinning Fitch's 'AA' rating is the city's tight budget monitoring and control as demonstrated by its ability to achieve consistent balance and manage out-year gaps.

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

SOLID UNDERPINNINGS; CYCLICAL REVENUE: 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 debt burden given the city's significant capital commitments and expected future tax-supported issuance. Post-employment liabilities are also high. Fitch expects the combined burden on the budget of long-term liabilities will remain elevated but fairly stable.

RATING SENSITIVITIES

BUDGET BALANCE CRUCIAL: Given the modest level of accumulated reserves, the rating is sensitive to the city's ability to continue to address budget imbalances and demonstrate financial flexibility through sizable prepayments of future years' expenditures. Fitch expects these prepayments to grow 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.

For more information see Fitch's press release dated July 24, 2015, available on Fitch's web site at 'www.fitchratings.com'.

Date of Relevant Rating Committee: May 28, 2015

Additional information is available at 'www.fitchratings.com'.

Fitch recently published an exposure draft of state and local government tax-supported criteria (Exposure Draft: U.S. Tax-Supported Rating Criteria, dated Sept. 10, 2015). The draft includes a number of proposed revisions to existing criteria. If applied in the proposed form, Fitch estimates the revised criteria would result in changes to less than 10% of existing tax-supported ratings. Fitch expects that final criteria will be approved and published by the end of the first quarter of 2016. Once approved, the criteria will be applied immediately to any new issue and surveillance rating review. Fitch anticipates the criteria to be applied to all ratings that fall under the criteria within a 12-month period from the final approval date.

In addition to the sources of information identified in Fitch's Tax-Supported Rating Criteria, this action was informed by information from Creditscope and IHS Global Insight.

Applicable Criteria

Exposure Draft: U.S. Tax-Supported Rating Criteria (pub. 10 Sep 2015)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=869942

Tax-Supported Rating Criteria (pub. 14 Aug 2012)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=686015

U.S. Local Government Tax-Supported Rating Criteria (pub. 14 Aug 2012)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=685314

Additional Disclosures

Solicitation Status

https://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=997889

Endorsement Policy

https://www.fitchratings.com/jsp/creditdesk/PolicyRegulation.faces?context=2&detail=31

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