Issuer NYCTL 2025-A Tax Lien Collateralized Bonds is preparing to raise $219.9 million in securitized bonds that will be repaid through repayment The City of New York's tax liens.
The transaction will issue one tranche of class A notes that is slated to mature in November 2038, according to analysts at Moody's Ratings. Unpaid tax liens on commercial and residential properties are just some of the assets in the collateral pool, which includes real property taxes, assessments, sewer rents, sewer surcharges, water rents and other charges for city infrastructure and services, according to the rating agency.
The deal features a full turbo amortization structure, where all collections will be applied to amortize the bond principal. No cash will be paid to the sponsor until the bonds are paid in full, the rating agency said.
J.P. Morgan Securities is the managers, according to Asset Securitization Report's deal database. Moody's assigned Aaa to the deals' single A class tranche.
NYCTL's collateral pool New York City will retain the beneficial ownership interest in the issuer, Moody's said. The tax lien is senior to all liens, charges and other property-related obligations. This is outside of any restrictive covenants and easements on the property or any other tax liens attached to the property.
There are 3,915 liens in the pool, which have a low lien-to-value ratio on a weighted average (WA) basis of 15.5%, Moody's said. This is a low LTV ratio, but it is meaningfully higher than the similar metrics of all transactions from the platform since 2011, except one.
New York City's resilient real estate market is another positive deal characteristic, according to Moody's. In recent years, housing values in the New York metro area increased more than 30%, exceeding the 19% increase seen nationally, Moody's said.
Drawbacks include the fact that some liens can remain outstanding for significantly past the first 36 months. That doesn't happen very often, however, as obligors on the NYCTL's other transactions, have usually redeemed liens in the first 36 months, according to the rating agency.
Manhattan, Brooklyn and Queens account for the largest percentages of the tax lien pool, with 28.5%, 28.4% and 27.2%, respectively.
