A major debt-rating agency has given “A” ratings to a pair of upcoming state bond issues worth $500 million.
S&P Global Ratings assigned the ratings on the state’s approximately $400 million general obligations (GO) bonds, and $100 million refunding bonds.
S&P also affirmed its “A” rating on the state’s approximately $18.1 billion outstanding debt.
Meanwhile, the agency affirmed its”A-” rating on state appropriation-secured debt and “BBB” rating on moral obligation debt. S&P’s outlook is stable on all of Connecticut’s long-term debt.
The agency said it could raise Connecticut’s outlook if debt levels moderate or if the state regains a flexible budget due to “robust” revenue growth. A lower rating, however, could also be assigned if revenue shortfalls cause budgetary delays, among others factors.
S&P said the ratings reflect the company’s view of the state’s high income levels, diverse economy and monitoring of revenues and expenditures in identifying mid-year budget gaps, among others factors.
“The stable outlook reflects our anticipation that state debt, pension, and OPEB ratios will remain high, but near current levels, during our two-year outlook horizon, while at the same time Connecticut’s budget will likely remain near structural balance absent an economic downturn,” said David Hitchcock, a credit analyst at S&P.
Meantime, State Treasurer Denise L. Nappier last week said Connecticut’s upcoming bond issue on June 6 will bear for the first time fiscal covenants in keeping with state budgetmakers’ efforts to force the state to live within its means.
Employing the fiscal covenants comes after the legislature and Gov. Dannel P. Malloy last fall approved legislation mandating four distinct financial measures that must be met over the next five years.
