Coronavirus brings New Jersey a negative outlook from Moody's

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New Jersey’s rating outlook was revised to negative from stable Monday by Moody’s Investors Service, which affirmed its A3 rating on the state’s GO debt.

“The affirmation of New Jersey's ratings and revision of the outlook to negative from stable reflects the impact of the coronavirus crisis on the state and our expectation that the crisis will have substantial impacts on state finances and the economy,” according to Moody’s.

A medical worker swabs a patient at a drive-through COVID-19 testing center in Paramus, New Jersey, Friday.

Despite approved and expected federal emergency funding, Moody’s expects the COVID-19 pandemic to strain New Jersey’s ability to structurally balance its budget and elevate its already-high liabilities.

New Jersey’s ratings, following multiple downgrades during the previous administration of Gov. Chris Christie, are the second-lowest among states, ahead of only Illinois.

New Jersey is rated A-minus by S&P, and A by both Fitch Ratings and Kroll Bond Rating Agency.

As with Illinois, New Jersey’s ratings are weighed down by long-term and systematic pension underfunding.

The Moody’s action affects about $35.9 billion of rated debt, including debt through many issuers that are linked to the state’s rating, among them Baa1 and Baa2 rated appropriation backed debt and the Baa1 rated New Jersey Municipal Qualified Bond Program and New Jersey Qualified School Bond Program.

On April 1, state officials announced that New Jersey will extend the June 30 close of the 2020 fiscal year by three months to get a handle on the fiscal implications of the pandemic.

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Ratings Coronavirus State of New Jersey New Jersey State budgets