N.Y.’s Bondholders, Citizens Have Fuzzy Picture of Debt (1)

Municipal bond investors may have made “artificial” distinctions among New York state borrowers and overallocated their portfolios to bonds from New York issuers, according to a report released Thursday by the Volcker Alliance.

New York makes extensive use of state public authorities to circumvent constitutional debt limits and backs billions of dollars in debt issued for New York City schools, the Metropolitan Transportation Authority and state university dorms, according to the report, authored by Matt Fabian and Lisa Washburn, managing directors at Municipal Market Analytics.

This complex and opaque debt structure could pose challenges to New York in a ...