Standard & Poor's Ratings Services said it has lowered its rating on New Jersey's general obligation bonds to A from A-plus.
Standard & Poor's lowered its rating on New Jersey's appropriation-backed debt to A-minus from A, and its rating on New Jersey's
moral obligation debt to BBB from BBB-plus.
Standard & Poor's also removed the ratings from CreditWatch with negative implications, where they had been placed June 2, 2014. The outlook is stable.
"The downgrade reflects our view that New Jersey will face increased long-term pressures in managing its long-term liabilities and that the revenue and expenditure misalignment will grow based on reduced funding of the state's unfunded actuarial accrued liability," said Standard & Poor's credit analyst John Sugden.
At the same time, Standard & Poor's assigned its A-minus rating and stable outlook to New Jersey Educational Facilities Authority's higher education facilities trust funds, series 2014A.
The trust fund bonds are secured by payments received by the authority pursuant to the Trust Fund Act. Payments are subject to appropriation by the New Jersey legislature in accordance with the trust fund act.
The state is issuing the series 2014 trust fund bonds to fund capital improvement grants to certain public and private higher education institutions. The A-minus rating reflects the appropriation risk associated with the bonds as well as the state's general creditworthiness.
