Moody’s Investors Services has downgraded Connecticut’s general obligation bonds from the Aa2 rating it has held for 21 months to Aa3. Budget chief Ben Barnes lashed back — saying Moody’s took the action to detract attention from what he called the rating’s services “historic lack of credibility.”
Barnes called Moody’s “wrong in its analysis of the state’s finances and wrong to change Connecticut’s credit rating.” Barnes says things have gotten better since April of 2010, when the Aa 2 rating was issued. And he points out that both Standard & Poor’s and Fitch rate Connecticut debt as AA, the equivalent of Moody’s Aa2.
Moody’s attributes the downgrade to the state’s high fixed costs on existing debt, and to benefits for retirees as a portion of the state budget. It says the state’s pension ratios are among the lowest in the country, and says prospects for replenishing the rainy day fund are slim, near-term.
Moody’s does say the state’s budget outlook is stable, and predicts that revenue trends will improve as the state moves out of the recession, and the state switches to “Generally Accepted Accounting Principles.”
The rating affects $14.6 billion in outstanding state debt.