Connecticut’s state treasurer says a negative debt outlook from two of four Wall Street credit rating firms won’t impact the state’s upcoming $500 million bond sale.
Treasurer Denise L. Nappier said Tuesday that three – Moody’s Investors Service, Standard & Poor’s and Fitch Ratings — graded “A” the state’s general obligation (GO) bonds after reviewing and reaffirming their ratings.
A fourth, Kroll, also is expected to give a top rating to Connecticut’s GO debt when it is released later today.
S&P, however, placed the GO bonds on “negative outlook.’’ Fitch also has had the bonds on negative outlook since July 2013.
S&P said its revised outlook reflects the state’s increased budget pressures resulting from weak revenue growth, which has contributed to a projected fiscal year 2016 budget gap of $1.1 billion.
“Today’s news is bittersweet, no doubt,” Nappier said in a statement. “While there is the good news that the state’s ratings remain unchanged — which demonstrates continued confidence in our creditworthiness — the recent negative outlook further strengthens our resolve to fortify the state’s fiscal footing.’’
The state’s top budget official, Secretary Ben Barnes, said Connecticut’s finances will bounce back and justify the “A’’ ratings.
“We anticipate significant revenue when tax returns are filed in April,’’ Barnes said in a separate statement Tuesday. “We will negotiate a responsible and balanced biennial budget with legislative leaders, including funding of GAAP and our pension liabilities. We expect these factors, along with continued prudent fiscal management and economic improvement, will brighten the outlook for Connecticut’s credit.”
The GO bond issue scheduled for this week consists of $400 million of tax-exempt bonds and $100 million of taxable bonds. Retail investors can buy bonds Wednesday, while institutional buyers can purchase them on Thursday.
The proceeds, Nappier said, will be used to fund $122.8 million in local school construction grants; $105 million for miscellaneous state grant programs; $55.5 million for Department of Education grants; $50.8 million for the Jackson Labs project; $39 for various housing programs; $20 million for the Bioscience Connecticut Initiative; $15 million for town road aid projects; $15 million for the Emergency Mortgage Assistance Program; $12 million for the Capital Region Development Authority for the XL Center; $11.5 million for brownfield loans; $10 million for the manufacturing assistance grants; $10 million for the Local Capital Improvement Program; and the balance of $33.2 million will be used to fund various state building projects.
Day Pitney LLP and Finn Dixon & Herling LLP are disclosure counsel for the GO sale. Robinson & Cole LLP and Soeder & Associates LLC are tax counsel.
Acacia Financial Group Inc. and A.C. Advisory are financial advisors for this sale.
