{"id":18990,"date":"2025-06-27T12:01:09","date_gmt":"2025-06-27T12:01:09","guid":{"rendered":"https:\/\/www.europesays.com\/us\/18990\/"},"modified":"2025-06-27T12:01:09","modified_gmt":"2025-06-27T12:01:09","slug":"why-buying-nyc-bonds-could-pay-off-even-if-zohran-mamdani-becomes-mayor","status":"publish","type":"post","link":"https:\/\/www.europesays.com\/us\/18990\/","title":{"rendered":"Why buying NYC bonds could pay off \u2014 even if Zohran Mamdani becomes mayor \u00a0"},"content":{"rendered":"

A crazed socialist who knows little about private sector employment<\/a> because he never held a real job could be running New York City \u2013 which seems like the biggest sell signal imaginable if you\u2019re one of those Gothamites who own \u201ctax-free\u201d municipal bonds issued by the Big Apple.<\/p>\n

But there\u2019s a good case to be made for playing an investment long game even if Zohran Mamdani becomes mayor<\/a>.<\/p>\n

Full disclosure: I hold NYC bonds, so I\u2019ve done more than a little work on this issue. Muni\u2019s \u2014 as they are known in the market \u2013 don\u2019t get the respect they deserve from investment advisers because of the business media\u2019s obsession with the stock market and the next hot tech company.<\/p>\n

There\u2019s a good case to be made for playing an investment long game even if Zohran Mamdani becomes mayor. Jack Forbes \/ NY Post Design<\/p>\n

But they deserve your consideration: If you have a few bucks, they offer immense tax advantages. They are triple-tax free \u2014 free of city, state and federal taxes \u2014 when you buy a bond issued by the city or town where you live.<\/p>\n

Given the high-taxes in New York City, and New York State, you can see why they\u2019re a good deal. If you hold to the time they mature, you don\u2019t have to worry about any adverse market moves. You just sit back and clip coupons. NYC muni returns seem a lot lower than stocks, but remember they\u2019re not taxed.<\/p>\n

\t\t\tMore From\t\t\t\t\t\t\tCharles Gasparino<\/p>\n

Here\u2019s where things can get dicey if you\u2019re a muni holder. It\u2019s rare but municipalities have been known to file for bankruptcy and screw bond holders. Puerto Rico did that not too long ago, same with Detroit and Orange County, Calif., back in the 1990s. NYC came close in the 1970s during the infamous financial crisis, but it avoided a full-on default.<\/p>\n

The city\u2019s budget under Eric Adams is pretty solid today for all Gotham\u2019s problems. But remember defaults do occur when fiscal leaders spend more than they have.<\/p>\n

Mamdani, if you take him at his word, wants to spend money like crazy and tax rich people and businesses so much that they will have little choice but to keep moving to Florida. It should be a recipe for default, and at least lower muni-bond prices following downgrades in ratings by bond-monitors like Fitch, S&P and Moody\u2019s.<\/p>\n

Mamdani, if you take him at his word, wants to spend money like crazy and tax rich people and businesses so much that they will have little choice but to keep moving to Florida. ZUMAPRESS.com \/ MEGA<\/p>\n

Bond holders, if he has his way, will be last to get paid and that\u2019s if there\u2019s any money left from his idiotic spending plans.<\/p>\n

Fortunately for NYC muni buyers, it\u2019s really not Mamdani\u2019s call. There are two main types of NYC bonds \u2013 general obligations and something known as the Transitional Finance Authority (or TFA) debt, which was set up when the city hit its state-mandated limit to issue more debt so it could build infrastructure and keep the lights on.<\/p>\n

Both have what\u2019s known as \u201cliens\u201d or first dibs on tax revenues.<\/p>\n

The city\u2019s budget under Eric Adams is pretty solid today for all Gotham\u2019s problems. But remember defaults do occur when fiscal leaders spend more than they have. AP<\/p>\n

The GOs lien, created after the fiscal crisis to give people enough confidence to buy debt, is on property taxes. TFA gets first crack on personal income taxes and sales taxes before Mamdani might get his hands on the money.<\/p>\n

This is all mandated by state law, not the city\u2019s so it would take an act of the state Legislature to change the order of these payments, which is possible, though unlikely. The city and state need access to the market and messing with this would certainly prevent that.<\/p>\n

\t\t\t\t\t\t\tCharlie Gasparino has his finger on the pulse of where business, politics and finance meet\t\t\t\t\t\t<\/p>\n

\n\t\t\t\t\t\t\tSign up to receive On The Money by Charlie Gasparino in your inbox every Thursday.\t\t\t\t\t\t<\/p>\n

\t\t\t\t\t\tThanks for signing up!\n\t\t\t\t<\/p>\n

Here\u2019s where things could get interesting. If Mamdani becomes mayor, prices of NYC munis will fall because of his spending and because people and businesses will likely flee<\/a> and those bond ratings will tank. Prices will dip since traders will bet there\u2019s less money to go around.<\/p>\n

But remember it pays to hold muni bonds to maturity and collect those coupons while you wait until you get your principal back at maturity. And in NYC, NYC muni holders get paid first. Given the high tax nature of the place, these bonds are often in demand, meaning you can make the case that Mamdani is a buying opportunity.<\/p>\n

One potentially big caveat: There are a lot of Mamdanis in Albany, so it\u2019s possible that Albany could undo all those bondholder protections down the road. <\/p>\n

Either way if you already own NYC debt, now is not time to panic \u2013 even if a rank amateur takes up residence in Gracie Mansion.<\/p>\n","protected":false},"excerpt":{"rendered":"A crazed socialist who knows little about private sector employment because he never held a real job could…\n","protected":false},"author":3,"featured_media":18991,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5122],"tags":[5229,17945,64,4209,5248,405,403,5226,5225,5228,5227,5341,14548,67,586,132,5230,68,2969,5301],"class_list":{"0":"post-18990","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-new-york","8":"tag-america","9":"tag-bonds","10":"tag-business","11":"tag-investments","12":"tag-metro","13":"tag-new-york","14":"tag-new-york-city","15":"tag-newyork","16":"tag-newyorkcity","17":"tag-ny","18":"tag-nyc","19":"tag-nyc-mayoral-election-2025","20":"tag-on-the-money","21":"tag-united-states","22":"tag-united-states-of-america","23":"tag-unitedstates","24":"tag-unitedstatesofamerica","25":"tag-us","26":"tag-usa","27":"tag-zohran-mamdani"},"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@us\/114755225806990656","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/posts\/18990","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/comments?post=18990"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/posts\/18990\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/media\/18991"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/media?parent=18990"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/categories?post=18990"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/tags?post=18990"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}