Hartford Downgraded Four Levels by S&P as $30 Million Gap Looms
(Bloomberg) -- Hartford’s credit rating was lowered four levels by S&P Global Inc. because Connecticut’s capital city doesn’t have a “credible plan” to balance its budget.
The rating company on Thursday cut Hartford’s rating to BBB, two levels above junk, as its fiscal 2017 budget relies on the use of reserves and labor concessions that may not materialize. The city faces a $30 million budget deficit in 2018, growing to $50 million in later years. S&P also assigned a negative outlook.
“We’re opening the books and telling the real story, because that’s the only way we’re going to be able to make real and lasting change,” Hartford Mayor Luke Bronin said in a statement. “The rating agency action reflects what I’ve been saying for many months, which is that the city of Hartford can’t cut or tax its way out of this challenge by itself.”
The downgrade extends to the Hartford Stadium Authority’s lease revenue bonds, which were cut one step to BBB- from A. The Hartford Yard Goats, the Double-A affiliate of Major League Baseball’s Colorado Rockies, were forced to play all their games on the road in 2016 because of construction delays at their new stadium.
“The downgrade reflects Hartford’s ongoing structural imbalance and our opinion about its lack of a credible plan to restore balanced operations,” S&P said in a news release. “Until the city can adopt a credible plan and sustain improved budgetary performance, the rating reflects our weak view of budgetary conditions.”
Hartford general obligation bonds with a 5 percent coupon and callable in 2023 traded Thursday at 2.37 percent, or 1.1 percentage point more than top-rated debt.
Hartford is the biggest employment center in Connecticut and home to insurance giants Aetna Inc. and Hartford Financial Services Group. Inc.