Press Release|Public Finance
KBRA Assigns AA+ Rating to Various State of Connecticut GO Bonds; Affirms Rating for Parity Bonds
19 Sep 2024 | New York
KBRA assigns a long-term rating of AA+ to the State of Connecticut: General Obligation Bonds (2024 Series F); General Obligation Bonds (2024 Series G) (Social Bonds); and General Obligation Refunding Bonds (2024 Series H). KBRA additionally affirms the long-term rating of AA+ for the State's outstanding General Obligation Bonds.
Key Credit Considerations
The rating actions reflect the following key credit considerations:
Credit Positives
- State is estimated to have completed FY 2024 with a BRF balance exceeding the statutory cap at 18% of general fund appropriations and is positioned to direct surplus resources toward supplemental pension contributions for a fifth consecutive year.
- Strong financial management framework and recent extension of enhanced statutory fiscal guardrails through at least FY 2028 position the State for strong operating results.
- Strong wealth levels with the second highest per capita personal income level among all states.
Credit Challenges
- Lower relative growth in the economic indicators of population, employment, and gross state product, although there are recent signs of growth in population.
- Unfunded pension liabilities and tax-supported debt burden are high relative to personal income, each more than 3x the respective U.S. average. However, the State borrows for many local purposes and the comparison on a combined state and local basis is more moderate.
Rating Sensitivities
For Upgrade
- Significant improvement in the funded ratios for the State’s pension systems.
For Downgrade
- Structural operating deficits in the general fund.
- Sustained weakening in the State’s employment base and economic activity.
To access rating and relevant documents, click here.