Moody's Ratings has upgraded the state of Connecticut to Aa2 from Aa3.
Moody's analysts credited the upgrade to Connecticut's governance improvements put in place in 2018, which have reduced the state's liabilities and improved its reserves.
The state will soon take the new rating to market with a sizable general obligation deal.
Connecticut has a $1.1 billion general obligation bond sale on its
Connecticut's bond ratings have improved massively since 2017, when Moody's
The state struggled to budget through volatile revenues, and cycled through rapid tax hikes, budget cuts, and mid-year recissions. To solve a budget impasse, lawmakers implemented a set of policies known as the
The guardrails have fueled a
Connecticut owes this upgrade to the fiscal guardrails, Moody's analysts wrote.
"The strict adherence to adopted financial policies have also [led] to consistent structural balance and continued improvement in budgetary reserves," the report said.
The impact of the pre-guardrails period is still a drag on the rating, according to the report.
"While reduced, liabilities remain high, resulting in high fixed costs that limit budget flexibility compared to state sector peers," Moody's analysts wrote.
The upgrade affects $28 billion of outstanding debt, according to Moody's.
The following Connecticut credits have also been upgraded to Aa2: the Connecticut Housing Finance Authority, the Connecticut Higher Education Supplemental Loan Authority, the Connecticut Health and Educational Facilities Authority, the City of Hartford's special obligation refunding bonds, and special tax obligation transportation infrastructure bonds. The Connecticut Health and Educational Facilities Authority's state-supported child care revenue bonds have been upgraded to Aa3 from A1.
