NEW YORK--(BUSINESS WIRE)--Kroll Bond Rating Agency (KBRA) assigns a long-term rating of AA with a stable outlook to the State of Connecticut’s $500 million General Obligation Bonds (2015 Series E) and Taxable General Obligation Bonds (2015 Series B). The 2015 Series 2015 E & B Bonds will be issued as fixed rate bonds. In addition, KBRA affirms the long-term rating of AA with a stable outlook on the State’s outstanding General Obligation Bonds, excluding Bonds backed by a letter of credit or liquidity facility. After issuance of these Bonds, the State’s outstanding general obligation debt will total approximately $17.3 billion.
Connecticut’s economic recovery is continuing, though at a slower pace than the New England region and the U.S. as a whole. KBRA views the State’s financial position as having improved under the current administration but projects that budget pressures will continue as long as economic growth is relatively slow. KBRA views the State’s budget challenges as mitigated by the State’s demonstrated ability and willingness to raise revenues and make spending cuts during the fiscal year to maintain balanced operations during its slow recovery period. On July 20, 2015, the Office of Policy & Management (OPM) projected that the General Fund will close FY 2015 with a $70.9 million deficit, which equates to approximately 0.4% of FY 2015 General Fund appropriations. Based on state statute, the Budget Reserve Fund will be drawn down to fund the end of year deficit. Based on year end deficit projections, the Budget Reserve Fund is projected to be drawn down from $519.2 million to $448.3 million, or approximately 2.5% of FY 2015 General Fund appropriations. While KBRA views the magnitude of the projected FY 2015 deficit as minimal, it does represent a material drawdown of the State’s Budget Reserve Fund. The State’s liquidity position remains fairly strong, with the State’s total available cash at $2 billion as of July 21, 2015.
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KBRA is registered with the U.S. Securities and Exchange Commission as a Nationally Recognized Statistical Rating Organization (NRSRO). In addition, KBRA is recognized by the National Association of Insurance Commissioners (NAIC) as a Credit Rating Provider (CRP).