Ratings Agencies Keep Existing Ratings For State Bonds
HARTFORD, Conn. (AP) _ Four credit rating agencies have reaffirmed their ratings for Connecticut’s general obligation bonds and University of Connecticut bonds, but one agency downgraded its outlook, citing the state’s high debt levels and pension obligations.
Fitch Ratings in New York said the decision to revise its outlook for Connecticut’s profile from “stable” to “negative” stems from “the state’s failure to return to more structurally sustainable budgeting and rebuild flexibility at a time of unusually slow economic and revenue recovery.”
Office of Policy and Management Secretary Benjamin Barnes said Tuesday he was pleased to see the major rating agencies retained their AA ratings for Connecticut and did not express much worry about Fitch’s change in outlook. He noted 14 states and the District of Columbia were assigned a negative outlook by one or more rating agencies and said the change is not expected to increase the state’s borrowing costs because it’s not a rating downgrade.
“Fitch’s concerns about our vulnerability to continued economic weakness are reasonable, but ultimately not so great as to change our high-quality rating,” Barnes said in a statement. “They have affirmed that our revenue forecasts are reasonable, that our budget is balanced, and that our bonds continue to be an extremely safe investment in line with our AA rating.”
In its report, Fitch said Connecticut’s AA rating “reflects its vast wealth and income resources,” but added how that’s “tempered by a comparatively high burden of debt, retirement liabilities and other fixed costs.”
Barnes said Gov. Dannel P. Malloy’s administration is continuing to address its significant long-term liabilities, such as state pensions and deposits in the state’s rainy day fund, but acknowledged the administration’s efforts have been mitigated by the slow economy.
Senate Minority Leader John McKinney, R-Fairfield, a potential gubernatorial candidate in 2014, used the Fitch report to level criticism at Malloy, a Democrat.
“The facts speak for themselves,” he said. “Connecticut’s bond ratings are worse than they were when Governor Malloy took office, they have not recovered, and they are heading in the wrong direction.”
The other three rating agencies, Moody’s, S&P and Kroll, each reaffirmed their “stable” outlooks for the state.
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