Another ratings agency has placed a negative outlook on Connecticut’s general obligation bonds.
Governor Dannel Malloy's administration welcomed news that three of the four major credit rating agencies have reaffirmed the state’s AA rating. But Treasurer Denise Nappier described the news as bittersweet, because Standard & Poor's outlook on the bonds went from stable to negative.
Fitch has maintained a negative outlook on the state’s offerings since 2013, while Moody’s Investors Service outlook remains stable.
"Unlike some of our neighboring states which have been downgraded over the last year, we’re grateful that we’ve retained our AA ratings in the face of what we’ve long known – that despite a rebounding economy, state revenue has been growing too slowly to keep up with expenditures,'' said the governor's budget Chief Ben Barnes.
Nappier was more cautious. "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," she said in a statement.
In downgrading their outlook, Standard & Poor's said that Connecticut's "relatively weak" post-recession economic growth has increased budget pressure despite a substantial tax hike in fiscal year 2012.
Nappier said she doesn’t believe the negative outlook will have an impact on the state’s upcoming bond sale this week, which aims to raise $500 million.
