Fitch raises New York state outlook to stable

Fitch Ratings raised its credit outlook on New York state to stable from negative, while maintaining its AA+ rating on general obligation bonds.

The change in outlook "reflects the state's fiscal and economic progress to date as it recovers from the coronavirus pandemic," the ratings agency wrote in a report issued June 11.

"Although the state economy is likely to lag national medians for recovery, the massive influx of direct aid and economic stimulus from federal actions, including the American Rescue Plan Act, is bolstering the state's rebound and will provide material, albeit temporary, fiscal support to New York State," the report said.

On the plus side, "pensions have been well-funded, with net pension liabilities well below the median for states," the report said. "The state has a generally strong history of making actuarial pension contributions, with comparatively high funded ratios in the state's plans helping to support manageable contributions over time."

Fitch noted that the state's revenue performance "has progressively improved relative to forecasts at the start of the pandemic."

Fitch also cited some "uncertainties" in the state's financial health, most notably the "pace and strength of the recovery in New York City, the anchor of the state's economy."

The near-term impact of the pandemic "has been particularly severe in the city," the report said. "A weak rebound in employment, visitor volumes, real estate, commuting patterns and other activities there would affect overall state economic performance and could delay the state's fiscal recovery."

Fitch is the second ratings agency to raise the New York state credit outlook to stable from negative. S&P Global Ratings did so on June 11 while retaining its AA+ rating on general obligation debt.