By Michelle Kaske and Terrence Dopp -Bloomberg
New York and its municipalities have achieved lower 10-year borrowing costs than theirÂ New JerseyÂ counterparts since GovernorÂ Andrew CuomoÂ took office, reversing a trend that stretched back to 1994.
Since Cuomo, a 54-year-old Democrat, took his post at the start of 2011, 10-year debt sold by New York and its localities has yielded less on average than bonds issued in Republican GovernorÂ Chris Christieâ€™s New Jersey, data compiled by Bloomberg show. From 1994 through 2010, New York had the higher interest- rate penalty.
While the three major credit-rating companies last year downgraded New Jersey one level, citing reasons including its unfunded pension liability, New York is poised for its highest credit grade in four decades. Standard & Poorâ€™s last month revised its outlook on the Empire State to positive from stable after two consecutive on-time budgets.
â€œI have a bit more concern about New Jersey only because of their pension funding,â€ said Gary Pollack, who manages $12 billion as head of fixed-income trading at Deutsche Bank AGâ€™s private-wealth unit in New York. â€œNew York pension funds are very highly funded.â€
Both governors have made changes to retirement benefits, capped property taxes and cut spending. Yet New Jersey had about 68 percent of assets to pay future retirement costs as of June 30, 2011, according to state data. New Yorkâ€™s system was 90 percent funded at the end of fiscal 2011, according to the office of state ComptrollerÂ Thomas DiNapoli.
Localities in both states are borrowing at levels close to record lows. Still, since Jan. 1, 2011, yields on 10-year debt sold in New York areÂ 0.014 percentage pointÂ below New Jersey bonds of similar maturity on average, Bloomberg data show.
Thatâ€™s aÂ reversalÂ from the 16 years through 2010, when 10- year New York securities yielded 0.13 percentage point more on average than New Jerseyâ€™s, according to Bloomberg index data starting in 1994. In five-year debt, New Jersey issuers have paid more extra yield than New York borrowers on average since the start of 2010.
Longer-term bonds tell a different story in recent months.Â Interest ratesÂ on 30-year debt sold in the Garden StateÂ have been belowÂ New York bonds with a similar maturity since May 1, Bloomberg data show. Itâ€™s the first time thatâ€™s happened since August 2009. For 20-year maturities, New Jerseyâ€™s costs have been below New Yorkâ€™s for most of the past year.
Don’t let the MSM censor your news as America becomes Great Again. Over 500,000 Americans receive our daily dose of life, liberty and pursuit of happiness along with Breaking News direct to their inbox—and you can too. Sign up to receive news and views from The 1776Coalition!
We know how important your privacy is and your information is SAFE with us. We’ll never sell
your email address and you can unsubscribe at any time directly from your inbox.