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Statement on Rating Agencies Connecticut

Statement on Rating Agencies Connecticut

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Published by Helen Bennett
OPM Secretary Barnes on the credit-rating agencies maintaining the state’s bond ratings.
OPM Secretary Barnes on the credit-rating agencies maintaining the state’s bond ratings.

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Published by: Helen Bennett on Jul 02, 2013
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07/25/2013

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Contact:Gian-Carl Casa (860) 478-1756
July 2,2013
Bond Ratings Retained By All Four Major Credit-Rating Agencies
OPM Secretary Ben Barnes today responded to actions taken in recent days by the state's four rating agencies inanticipation of its upcoming issuance of $200 million of General Obligation Bonds.Moody's, Standard & Poor's and Kroll affirmed their existing ratings of Aa3
(Moody’s)
and AA (S&P, Kroll), all with stableoutlooks. Fitch also retained their AA rating, but changed the outlook for the state's general obligation debt tonegative.
Barnes said, “I am pleased to see that our double
-A ratings have all been retained by the major rating agencies. Fi
tch’s
concerns about our vulnerability to continued economic weakness are reasonable, but ultimately not so great as tochange our high-quality rating. They have affirmed that our revenue forecasts are reasonable, that our budget isbalanced, and that our bonds continue to be an extremely safe investment in line with our AA rating.The state continues our commitment to responsibly addressing our significant long-term liabilities. Unfortunately, ourconsiderable economic strengths, including high incomes, high levels of education, strong property values and highproductivity, have been mitigated by the long, sluggish recovery from the national recession. While we have madesignificant progress in addressing pension liabilities, have implemented GAAP, and have begun to make deposits into therainy day fund, a slower than expected recovery due in large part to inaction in Washington no doubt weighed heavily inFitch's decision to change the state's rating.This administration's commitment to responsible financial management and gradual resolution of our long-termliabilities remains strong. We look forward to the opportunity to incorporate the guidance and criticisms of all the ratingagencies in our policy recommendations in the coming year. I am optimistic that continued progress on economicrecovery, coupled with continued prudent management actions by the state, will lead to the prompt restoration of ourstable outlook."The state's ratings remain in line with our neighboring states -- the same or slightly below New York , Massachusetts andRhode Island, and better than New Jersey. The slight variation among these states is principally driven by the fundingcondition of and contributions to their respective pension plans. While Connecticut's plans remain significantlyunderfunded, recently implemented changes in how we calculate annual payments will allow for significant progresstoward full funding over the coming years.
According to Fitch, “Rating Outlooks indicate the direction a rating is likely t
o move over a one- to two-year period. Theyreflect financial or other trends that have not yet reached the level that would trigger a rating action, but which may do
so if such trends continue.”
 
In this case, Fitch pointed to “reduced fiscal flexibility
at a time of lingering economic and
revenue uncertainty.”
There are currently 14 states and the District of Columbia that have been assigned a negativeoutlook by one or more rating agencies.-30-
S T A T E OF C O N N E C T I C U T
OFFICE OF POLICY AND MANAGEMENT 

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