KBRA Revises Outlook to Positive for New Jersey GO and Related State Appropriation Credits; Affirms Outstanding Ratings; Assigns A Rating to NJTTFA Transportation Program Bonds, 2025 Series AA
6 Oct 2025 | New York
KBRA affirms the long-term rating of A+ for the State of New Jersey's General Obligation Bonds and revises the rating outlook to Positive, from Stable, for the State's General Obligation Bonds and related State Appropriation bonds.
The Positive Outlook reflects the State’s progress in reducing long-term pension liabilities and its continued adherence to conservative budgeting practices that have supported the orderly use of reserves accumulated during the COVID-19 pandemic. A rating upgrade may be warranted in the near term if the State maintains full actuarial pension contributions on an ongoing basis while preserving financial flexibility, notably strong operating reserves.
KBRA additionally assigns a long-term rating of A to the New Jersey Transportation Trust Fund Authority (NJTTFA) Transportation Program Bonds, 2025 Series AA.
Lastly, KBRA affirms the long-term rating of A for the following bonds:
New Jersey Transportation Trust Fund Authority
- Transportation Program Bonds
- Transportation Program Notes (Fixed Rate)
New Jersey Economic Development Authority (NJEDA)
- Lease Revenue Bonds
New Jersey Education Facilities Authority (NJEFA)
- Revenue Bonds, Higher Education Capital Improvement Fund Issues
Key Credit Considerations
The rating actions reflect the following key credit considerations:
Credit Positives
- State economic base is large and diverse. Per capita personal income is the eighth highest in the nation.
- Governor has broad executive powers under the New Jersey Constitution to adjust the budget and reduce spending to maintain budget balance.
Credit Challenges
- Unfunded pension and OPEB liabilities are very high relative to personal income and gross state product.
- While the State has drawn down the extraordinary reserves accumulated during the pandemic only gradually, the transition away from reliance on these non-recurring funds may be challenging.
Rating Sensitivities
For Upgrade
- Track record of consistently balanced operations that does not rely upon non-recurring revenues, provides full actuarially determined pension contributions, and supports maintenance of substantial operating reserves.
- Economic growth patterns that meet or exceed regional and national trends.
For Downgrade
- A resumption of the pattern of underfunding full actuarial pension contributions.
- A significant diminution of reserves to balance financial operations to a level no longer consistent with the rating level.
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