As the state budget and aid for the cash-strapped city of Hartford hang in the balance this week, S&P Global Ratings lowered the Capital City’s junk bond status Thursday by four more notches.
Hartford’s general obligation bond rating dropped to ‘B-’ from ‘BB’, while the Hartford Stadium Authority’s lease revenue bonds dropped three notches to ‘B-’ from ‘BB-’, the ratings agency said. The stadium authority is on the hook for the debt that was used to erect Dunkin’ Donuts Park.
Even though Gov. Dannel P. Malloy’s third state budget proposal provided $46 million for multiple distressed communities, there would be no recurring revenue for Hartford, said ratings analyst Victor M Medeiros. On top of that, Hartford lacks a plan to “achieve structural balance even with the state budget proposal aiding the liquidity position,” Medeiros said.
About a week ago, Hartford Mayor Luke Bronin informed Malloy that the city won’t be able to meet its financial obligations two months from now, which could mean an imminent municipal bankruptcy filing. While insolvency hasn’t been declared, some city councilors later indicated they would oppose bankruptcy.
Reached Friday morning, after Malloy’s and Democrats’ latest budget revisions did not make it to a vote, Bronin reiterated his view in an email that “a truly long-term, sustainable solution is going to require the participation of all stakeholders,” including bondholders who might help with long-term debt restructuring.
