The City of New York is preparing to issue $126.3 million of bond backed by property tax lien certificates on residential and commercial properties in New York City, according to a presale report published by Moody’s Investors Service.
The certificates are collateralized by first priority liens on residential and commercial properties located throughout the five boroughs of the City, arising out of delinquent real estate property taxes, water and sewer charges, and other charges.
The deal, NYCTL 2014-A, will issue $95.48 million class A senior certificates that are provisionally rated Aaa’ by Moody’s; they are set to mature in November 2027.
Moody’s believes that the collateral backing NYCTL 2014-A is stronger relative to the city’s previous tax lien securitization, NYCTL 2013-A, which closed in August 2013. The 2014-A receivables have a weighted average loan-to-value of 11.51% compared with 2013-A’s 14.27%. In general, high LTV properties are more risky than low LTV properties as recovery rates may be higher for low LTV properties. Also, 2014-A’s collateral has less concentration in vacant land compared with that of 2013-A: 5.31% vs. 7.70%.
Moody’s assigned 2013-A’s $91.37 million class A, fixed-rated tax lien certificates Aaa’ status. The certificates mature in November 2026,
This is the twentieth tax lien securitization sponsored by the City of New York since the start of the program in 1996.