July 14, 2017

As Hartford's downgraded, Bronin says 'all stakeholders' must solve city's fiscal crisis

HBJ Photo | Matt Pilon
HBJ Photo | Matt Pilon
Hartford Mayor Luke Bronin.

It's been a rough week for the city of Hartford, which has received downgrades from two prominent ratings agencies, but the city's mayor remains undaunted.

"All stakeholders" will have to be part of any effort to solve the Capital City's budget crisis, Bronin said in emailed responses to both downgrades, even if that means bondholders take a haircut.

On Thursday, Moody's downgraded Hartford's general obligation debt rating to B2 from Ba2, based on the city's $50 million 2018 budget deficit and the likelihood that Hartford will pursue debt restructurings as it consults with the bankruptcy adviser it hired last week to address the situation.

Also factored in are reliance on state funds to aid a recovery even though the state's own budget is severely out of balance, and Aetna's recently announced headquarters relocation to New York City, said Moody's lead analyst, Robert Azrin. He also notes, however, that city leadership is "proactively seeking long-term solutions" to the fiscal crisis.

On Wednesday, S&P Global Ratings downgraded Hartford's debt to junk bond status.

In measured responses to both situations, Bronin insisted no options should be taken off the table, a stance he has maintained for months.

"We are committed to achieving a comprehensive, long-term solution for the city of Hartford," he said in response to the S&P Global downgrade. "That will require every stakeholder – from the state of Connecticut to our unions to our bondholders – to play a significant role. Today's downgrade should send a clear message to our legislature, to labor, and to our bondholders that this is the time to come together to support a true, far-sighted restructuring."

He reiterated that view when responding to the Moody's downgrade, noting, "We have made deep cuts in services and personnel and pursued aggressive concessions from labor. In order for our Capital City to thrive over the long term, we must seize this moment to make long-overdue, desperately-needed structural changes. All stakeholders will have to be part of that solution."

Elaborating further, Bronin said he anticipated the rating agency actions, "both because of the state's failure to adopt a budget and because we have made clear that we are looking for bondholders to be a part of the solution. We are determined to use this crisis as an opportunity to make the long-overdue structural changes that will allow Hartford to thrive in the long-term."

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