By Fran Wilson, Staff Writer
HARTFORD — Despite lingering economic and revenue uncertainty, Connecticut’s bond ratings have remained relatively the same, according to Office of Policy Management Secretary Ben Barnes.
Four bond agencies reaffirmed Connecticut’s outlook: Moody’s, Standard & Poor’s and Kroll gave the state its existing ratings of Aa3 (Moody’s) and AA (S&P, Kroll), all with stable outlooks. Fitch retained their AA rating but changed the outlook for the state’s general obligation debt to negative, downgrading its economic outlook because of the state’s high debt levels and pension obligations.
What does this mean? The state’s cost of borrowing has not changed. But the one negative outlook–not rating–has some concerned.
In report by the Associated Press, Senate Minority Leader John McKinney, R-Fairfield, a potential gubernatorial candidate in 2014, used the Fitch report to level criticism at Dannel 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.’’
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.’’
Barnes said Tuesday he was not worry about Fitch’s change in outlook.
‘‘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.’’
Officials credit the state’s economic strengths, such as high incomes, high levels of education, strong property values and high productivity, as factors in mitigating the long, sluggish recovery from the national recession.
Barnes also noted that the state’s ratings remain in line with neighboring states — the same or slightly below New York , Massachusetts and Rhode Island, and better than New Jersey.There are currently 14 states and the District of Columbia that have been assigned a negative outlook by one or more rating agencies.
Barnes said that the state takes seriously changes in the outlook designation and views them as an opportunity to incorporate any guidance and criticisms in developing policy recommendations in the coming year.
Summary and Explanation of Rating Agency Actions
In connection with the upcoming sale of general obligation bonds
All four rating agencies reaffirmed existing state ratings of general obligation bonds as follows:
- Fitch AA
- Moody’s Aa3
- S&P AA
- Kroll AA
As part of the ratings process, agencies also assign an outlook. Three of the four agencies reaffirmed their existing outlook for the state:
- Moody’s Stable
- S&P Stable
- Kroll Stable