December 7, 2017

One of two ratings agencies eyes CT bonds skeptically

Two ratings agencies have assigned an "A+" rating to $400 million in Connecticut general obligation bonds, but the outlook from one is negative and the other stable.

S&P Global Ratings and Fitch Ratings also addressed the state's other types of outstanding debt Wednesday, but S&P Global warned of a negative outlook on all long-term debt, while Fitch maintained its outlook as stable.

On the plus side, S&P Global said, the state's high income levels, diverse economy, active monitoring of ongoing expenditures and revenues, and adequate operating liquidity show stability. However, negative factors tied to the four-month delay in enacting a biennial $41.3 billion budget include population decline, weak financial reserves, slow growth and gradual job loss.

"Above-average debt, high unfunded pension liabilities, and large unfunded other postemployment benefit liabilities ... create what we believe are significant and growing fixed-cost pressures that restrain Connecticut's budgetary flexibility," S&P said.

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