State\’s Bond Ratings Maintained by 4 Agencies; Fitch Drops Outlook To Negative

by Categorized: 2014 Election, Gov. Dannel Malloy, UConn Date:

Despite the still-sluggish state economy, four Wall Street ratings agencies have reaffirmed the state\’s bond rating.

But while the Fitch Ratings agency maintained the bond rating, it reduced Connecticut\’s overall outlook from stable to negative, pointing to the state’s “reduced fiscal flexibility at a time of lingering economic and revenue uncertainty.”

“The enacted budget for the new biennium delays repayment of deficit borrowing, adds to an already high debt load, and fails to rebuild the state\’s financial cushion,’’ Fitch analysts concluded, citing the state’s high debt and pension obligations.

Three other agencies – Moody\’s Investors Service, Standard & Poor\’s, and Kroll Bond Ratings – maintained the outlook at stable.

\”I am pleased to see that our double-A ratings have all been retained by the major rating agencies,\’\’ Ben Barnes, Gov. Dannel P. Malloy\’s budget director, said in a statement. \”Fitch\’s concerns about our vulnerability to continued economic weakness are reasonable, but ultimately not so great as to change our high-quality rating. 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.\’\’

State Treasurer Denise Nappier, who oversees bond sales, said, \”While I am disappointed with Fitch’s negative outlook, I don’t foresee this opinion by one agency impacting our upcoming bond sales. With that said, our state does have a way to go to achieve full, sustainable recovery over the long haul. That means, among other things, coming to grips with the state’s long-term unfunded obligations while honoring its commitments to our most vulnerable citizens. I remain optimistic that we will get there in due course. Simply put, we have no choice – we can’t afford to do otherwise.\’\’

The Malloy administration issued a statement that said, \”This change in outlook is not expected to increase the state\’s borrowing cost as this is not a downgrade to the state\’s ratings.\’\’

The bonds were rated now because of two bond sales that will be held in the coming weeks. The state will be selling about $225 million in bonds for UConn 2000, which is designed to make improvements to the state\’s flagship university. The second sale for general obligation bonds will fund $200 million of state projects.

But Republicans raised questions about the Malloy administration’s tax and spending policies that they say have contributed to economic sluggishness.

“Either the Malloy administration is looking at the negative impact of their fiscal mismanagement through rose-colored glasses, or they’re just not being honest with the people of Connecticut,’’ said Senate Republican leader John McKinney of Fairfield. “The facts speak for themselves. 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.’’

McKinney cited a direct quote from the Fitch agency that said, “The negative outlook is based on the state\’s failure to return to more structurally sustainable budgeting and rebuild flexibility at a time of unusually slow economic and revenue recovery.’’

Senator Rob Kane, the ranking Senate Republican on the legislature’s budget-writing committee, said, “I think it’s indicative of this administration’s tax-and-spend policy. The business community sees it. There’s no stability. There’s no growth in business or in industry. Unemployment remains stagant, at best, and yet we continue to spend.’’

The Courant is using Facebook comments on stories. To comment on articles, sign into Facebook and enter your comment in the field below. Comments will appear in your Facebook News Feed unless you choose otherwise. To report spam or abuse, click the X next to the comment. For guidelines on commenting, click here.

10 thoughts on “State\’s Bond Ratings Maintained by 4 Agencies; Fitch Drops Outlook To Negative

  1. Bill

    See, under Malloy we have both gun control and a stable economy in Connecticut. Once again the Democrats lead the way so others can follow. Boy, this is a truely great place to live. Hail Malloy.

    1. Connecticut is Circling the Drain

      Did you look at the article about the urban unemployment BillyJebJimmySusan? How about the change in outlook of one rating agency?

      Democrats are leading the way to our economic collapse in this state.

  2. deep44

    In 2012 Romney made a comment regarding allowing the Auto companies to file for chapter 11 as to allow the “market” to find a reasonable clearing price. While he was correct, it wass’t in the DNA of Officials to stomach such an event. CT Liberals are forcing the economy into this situation and it will come to fruition in October 2014. As the current budget revenue predictions are for personal income growth of 4% in 13 and 7% in 2014 fall short, In October 2014 CT will revaluate property prices and will be forced to make up the short fall. The internal fighting in Hartford will explode and the Democrats will turn on their liberal wing. This will force S&P, Moodys and Fitch to change their position.

    1. fred

      deep44, property taxes are paid to the cities and towns. How does this help the state budget? How did you get that Oct 2014 date? There is a schedule for property tax revaluation that varies by town. Only 15 towns revalue property in 2014 as shown in link below:

      1. Connecticut is Circling the Drain

        I believe deep44 is talking about a state property tax to make up upcoming state shortfalls. I have not heard of this but I agree with him that we will have more shortfalls to contend with. The state has already been through several rescission drills so the low hanging fruit had been picked. It could start to get interesting in this biennial state budget.

  3. Cromwell Democrat

    If anyone is naïve enough to believe anything from any credit rating agency after the last 10 years, they need to be examined.

    1. The Conn-servative

      I’m more apt to believe a credit rating agency’s,than some democrat from CT refusing to accept the fact that his/her party is causing and contributing to any chance of an economic recovery,due to the parties socialistic,anti business,pro tax and spend mentality. It just shows you that they’ll go to the mat for anything to defend their piss poor policies.

      1. Cromwell Democrat

        CT Democrats are Socialists, you conservatives have been mouthing that lie since the 50’s try something new. How about overt racism and provincialism – oh forgot that’s what the GOP is doing now.

        For the record, half of CT’s problem is high utilities costs, passed by the GOP and Libertarians and not one Democrat who voted for it remains in office. The other half of the problem is the EU’s economic situation decreasing trade with CT a major factor in out economy. What caused that fiasco, oh yea GOP and Libertarian financial deregulation and ongoing austerity policies that have been proven wrong. Now that I think about it, Conservatives should stick with the racism, provincialism and name calling, its all you have, the facts are not in your favor.

  4. The Conn-servative

    Yup.The usual tomfoolery response. Switch to the ever perpetual race card,that is backed by your lib media and race baiters at msnbc. Blame republicans for something that they have not had a majority voice of in years here in CT. At the end of the day,YOUR party of socio-comms are driving the bus here in Ct and you better watch out for that curve ahead because YOU are driving the bus over the guardrail,not the GOP. For the record the VP Biden and Hillary have been caught on audio/video saying, as you guys have defined it,racially sensitive comments aimed towards specific groups,so don’t think that it’s just conservatives you POS because you have the liBtard media telling everyone that and only airing the conservative racial comments. It’s your record of tax and spend that’s putting less discretionary money in everyone’s pocket.It’s your record of allowing for line cuts with respect to illegal immigration. It’s your record of of socialized medicine called the Unaffordable Healthcare Act which will give each one of us,less more to spend in the economy.Your party effectively takes what’s currently legal/moral and makes it illegal/immoral.Then takes what’s currently illegal/immoral and makes it legal/moral.It would be great if some so called top notch university would offer a degree in progressive disease disorders.

Comments are closed.