Hamden, Conn., got downgrades ahead of a planned general obligation bond sale.
Fitch Ratings downgraded Hamden general obligation bonds BBB-plus from A-minus Tuesday, affecting about $78.5 million of debt.
The move comes as Hamden plans to sell $29.3 million of GO bonds next week. Fitch maintained a negative outlook. Hamden, with a 57,000 population, borders New Haven.
Wednesday, Moody's Investors Service dropped Hamden to A3 from A2, also with a negative outlook.
Fitch cited the continued weakening of the town's pension plan and obstacles to pension stability, notably the need to negotiate benefit overhaul with labor to stave off plan insolvency.
"The funded ratio of the town's pension plan dropped significantly from already low levels in the past year as the city continued its practice of contributing far less than the actuarially calculated annual required contribution level," Fitch wrote.
Fully funding the projected pension cost of $27 million would require a significant increase from the $9.5 million appropriated in fiscal 2013, according to Fitch. Fitch added that while Hamden's unemployment rate remains persistently high, it expects the town's economy to benefit long-term from expanding education and health-care sectors,
Hamden is home to Quinnipiac University.