Mayor Mamdanis budget mess is creating chaos in the NYC bond market

New York City’s bonds have suddenly become a hot topic on Wall Street — and you can thank socialist Mayor Zohran Mamdani for this certifiably ­bizarre development.This past week, the Big Apple went to investors to sell billions of dollars in municipal debt.With Mamdani doing his best imitation of Fidel Castro, the city sold $2.3 billion — $300 million less than it had targeted.Mind you, I’ve been covering NYC bond deals for decades.

For the most part, they’ve been what you might call boring — in a good way.Even back under Mayor David Dinkins, when the city was reeling from the aftershocks of the 1987 stock market crash — not to mention Dinkins’ own spending largesse — the city’s bond sales remained mostly strong.Once the fiscal crisis of the 1970s and our near-default subsided in the minds of investors, NYC bond issues have frequently been “oversubscribed,” which in Wall Street lingo means there are more buyers than bonds available at auction.That’s because of the heavy city and state tax burden and how city debt provides significant yields that are triple tax-free, and not least, the protections provided by something called the Financial Emergency Act of 1975, the state law designed to make sure that what went down in the 1970s never happens again.The fact that the city had to scale back the latest bond issue because of the weakened demand indicates a particular investor animus to what Mamdani is doing, according to well-placed investors.One broker who deals with super-rich people looking for tax breaks in municipal debt says many of his clients are staying away from NYC debt — simply because they don’t trust Mamdani.“I’ve had clients that are selling them and others who don’t want to own them,” he said.

“That’s ­unusual because taxes might be ­going up.I don’t think they’re going to default, but it’s been difficult to make the sale.”You wouldn’t know any of this based on the spin from the city and its bond ...