Moody's downgrades New Britain's bond rating

Published on Saturday, 4 November 2017 22:32
Written by Skyler Frazer

Staff Writer

NEW BRITAIN -Moody’s Investors Service has downgraded the city’s bond rating, according to a report the agency published Oct. 1.

The downgrade drops the city’s general obligation debt rating to Baa2. The rating was previously Baa1. Moody’s also revised the outlook from stable to negative.

The downgrade reflects the city’s reliance on nonrecurring revenues to stabilize its financial position in recent years.

“The Baa2 rating further reflects the city’s significant sized tax base and challenged demographic profile. The rating also incorporates the city’s elevated debt profile with rapidly escalating debt service and its modest pension liability,” part of Moody’s summary reads.

In the rating outlook, Moody’s wrote: “The negative outlook reflects the near term challenge the city will face to match recurring revenues with recurring expenditures while managing its escalating debt service, which grows rapidly through fiscal 2021.”

“We were downgraded by Moody’s along with many other cities and towns across Connecticut as a result of the state budget crisis,” Mayor Erin Stewart said. “S&P (Standard & Poors), the largest municipal bond rating agency in the nation, upgraded us 4 times, most recently to an A-plus. I’m not concerned by this.”

Democratic mayoral candidate Merrill Gay blamed the downgrade on financial mismanagement.

“Mayor Stewart’s poor financial planning will cost New Britain taxpayers,” Gay said. “New Britain needs real economic development not increasing debt despite two tax increases.”

Stewart said, “It’s only been four years since we saved the city from the brink of bankruptcy. It takes a long time to get finances in order and it doesn’t happen overnight. I’m proud of our accomplishments and getting us back on the right track.”

Earlier in October, Moody’s named 26 municipalities to be reviewed for possible downgrades. Three regional school districts were also reviewed. At that time, Moody’s also assigned negative outlooks to ratings for three regional school districts and 25 municipalities, including Berlin and Plainville.

Skyler Frazer can be reached at 860-801-5087 or by email at sfrazer@centralctcommunications.com.



Posted in New Britain Herald, General News, New Britain on Saturday, 4 November 2017 22:32. Updated: Saturday, 4 November 2017 22:34.