It’s been sort of a streak. Three Wall Street rating agencies have downgraded Connecticut’s creditworthiness in the last five days.
S&P Global Ratings was the latest Wednesday to downgrade Connecticut’s bonds — from AA- to A+.
“The downgrade reflects our view of state economic weakness that has resulted in successive downward state revenue adjustments during a period of national economic growth,” S&P Global Ratings credit analyst David Hitchcock said.
The recent revenue forecast that wiped out Connecticut’s Rainy Day Fund has “opened up what we view as a very sizeable budget gap,” Hitchcock wrote. “In our view, the state will have limited remaining flexibility to respond to any further downgrade revenue adjustments due to the large expenditure cuts already made; the large and growing portion of the budget devoted to fixed costs for debt service, pension and other postemployment benefits (OPEB).”
The rating agency said Connecticut’s revenue growth is likely to remain weak even as the national economy grows because of its permanent loss of many high-paying financial sector jobs.
State Treasurer Denise Nappier said the news is “not totally unexpected, given that it has had Connecticut on negative outlook for the better part of six months.”
However, this follows downgrades by Moody’s Investor Services on Monday and Fitch Ratings last Friday.
“This is the latest shoe to drop, following downgrades by two other rating agencies,” Nappier said. “There is hard work ahead for all of us and, in particular, those in the midst of budget negotiations. Our decisions will impact on our state’s quality of life for its people and businesses alike. By doing the best we can in collaboration with one another, we can and will get through it.”