Wall Street improves Connecticut bonds

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S&P Global Ratings upgraded Connecticut’s general obligation bonds to AA- from A+. At the same time, it upgraded the Connecticut Transportation Special Tax Obligation bonds from AA- to AA and the University of Connecticut bonds from A+ to AA-.

The news comes a year after the four major credit rating agencies upgraded Connecticut’s general obligation bonds. S&P Global Ratings also maintained a “stable” outlook on Connecticut.

“Prior to the series of credit rating upgrades that began in March 2021, three of the four rating agencies rated the State’s GO bonds at the lower simple ‘A’ grade,” said Treasurer Shawn Wooden. “With today’s announcement from S&P, all four GO bond credit ratings are now in the highest ‘AA’ category.”

Added Wooden: “Achieving ‘AA’ credit ratings was a key priority for my administration. Today’s announcement from S&P accomplishes this goal, recognizing Connecticut’s smart fiscal policies, financial discipline, and improved fiscal track record. However, the real winners today are Connecticut residents because this rating upgrade will help reduce borrowing costs for projects and services across the state, saving taxpayers millions of dollars.”

In its analysis, S&P Global Ratings said it upgraded the bonds to reflect “our view of Connecticut’s sustained positive financial results and the building of high reserve levels during a recent period of revenue and economic growth,” the credit analyst wrote. of S&P Global Ratings, Thomas Zemetis.

Zemetis noted the “commitment to structural budget balance and reducing future growth of very high government debt, pensions and other post-employment benefit liabilities, which we expect to continue in future biennial budgets.”

He said the credit rating is underscored by Gov. Ned Lamont’s announcement to extend the financial controls passed as part of the bipartisan 2017 budget going forward.

As part of that bipartisan budget, lawmakers created what’s called a “bond lock” that prevented lawmakers from repealing those various spending, revenue, volatility, and bonus limits.

“The extension of these protections will send a strong signal to businesses, investors, credit rating agencies and the general public that Connecticut is serious about living within its means and saving for the future,” Lamont said. “As we develop a budget proposal that will be delivered to the General Assembly in February, these protections and their associated benefits will serve as the backbone of that proposal.”

Following news of the upgrade Monday, Lamont said, “This credit rating upgrade will mean lower costs for critical projects that move our state forward. It is a signal to businesses and residents that our state is on the right financial track, that we have demonstrated a commitment to getting our fiscal house in order, and continue to make significant progress addressing our pensions and other post-employment benefit liabilities. . . S&P recognizes the progress that has been made and that Connecticut is getting its mojo back.”

At times during his first term, the governor clashed with Democratic lawmakers, who sought to raise taxes on the state’s wealthiest residents or circumvent tax guardrails in an effort to fund spending priorities. Lamont said this week that he would not “hedge” the income and expense limits.

“They helped us get this state back on track when it comes to getting our fiscal house in order,” Lamont said earlier this month. “It basically says that you are not going to spend more than you can count in terms of income. I think it has served us very well and I am going to ask the legislature to continue that in the future. It gives us a clear sense of direction.”

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