Press Release|Public Finance

KBRA Upgrades State of Connecticut Special Tax Obligation Bonds (Transportation Infrastructure Purposes) to AAA; Assigns AAA Rating to Series 2023 A & B Bonds

29 Sep 2023   |   New York


KBRA upgrades the long-term rating to AAA, from AA+, for the State of Connecticut's Special Tax Obligation Bonds, Transportation Infrastructure Purposes. KBRA additionally assigns a long-term rating of AAA with a Stable Outlook for the States Special tax Obligation Bonds, Transportation Infrastructure Purposes, 2023 Series A and Special Tax Obligation Refunding Bonds, Transportation Infrastructure Purposes, 2023 Series B.

The upgrade of the long-term rating for the Bonds recognizes: the increased diversity and resilience of pledged revenues per the phased-in dedication of certain general sales and use taxes, motor vehicle sales tax, and highway use tax receipts; and, the recent stabilization of motor fuel tax receipts following the end of a gas tax holiday that was in place from March 2022 through April 2023. The rating is further underpinned by the ample coverage and growing nature of most revenues pledged to repayment, descending debt service requirements, and a robust legal framework that includes a fully funded debt service reserve fund at maximum annual debt service and a covenant for the State to provide pledged revenues in each fiscal year sufficient to provide at least 2.0x annual debt service coverage. In the event that debt service coverage does not meet the 2.0x requirement, the covenant requires that the State must pass legislation within one year adjusting pledged revenues to satisfy the coverage requirement. Such a covenant is a relative rarity in the broader category of special taxes.

Key Credit Considerations

The rating actions reflect the following key credit considerations:

Credit Positives

  • Diverse pledged revenue sources provide a stable source of payment solid coverage of debt service requirements.
  • The State’s commitment to transportation capital funding is strong and is buttressed by the public support for transportation purposes reflected in the passage of the November 2018 referendum.
  • Legal protections are favorable including a covenant to maintain at least 2.0x annual debt service coverage.

Credit Challenges

  • The State’s rate of economic growth has been slower than that of the U.S. and New England region for more than a decade although wealth levels are favorable.
  • Transportation needs are substantial and place pressure upon the State’s ability to fund them over the longer term.

Rating Sensitivities

For Upgrade

  • Not applicable at AAA rating level.

For Downgrade

  • An economic downturn that leads to a sustained decline in coverage levels and budgetary pressure on the State.

To access rating and relevant documents, click here.



A description of all substantially material sources that were used to prepare the credit rating and information on the methodology(ies) (inclusive of any material models and sensitivity analyses of the relevant key rating assumptions, as applicable) used in determining the credit rating is available in the Information Disclosure Form(s) located here.

Information on the meaning of each rating category can be located here.

Further disclosures relating to this rating action are available in the Information Disclosure Form(s) referenced above. Additional information regarding KBRA policies, methodologies, rating scales and disclosures are available at

About KBRA

Kroll Bond Rating Agency, LLC (KBRA) is a full-service credit rating agency registered with the U.S. Securities and Exchange Commission as an NRSRO. Kroll Bond Rating Agency Europe Limited is registered as a CRA with the European Securities and Markets Authority. Kroll Bond Rating Agency UK Limited is registered as a CRA with the UK Financial Conduct Authority. In addition, KBRA is designated as a designated rating organization by the Ontario Securities Commission for issuers of asset-backed securities to file a short form prospectus or shelf prospectus. KBRA is also recognized by the National Association of Insurance Commissioners as a Credit Rating Provider.

Doc ID: 1002419

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