Hartford, Conn.’s Ba2 general obligation debt rating is under review for a possible downgrade, said Moody's Investors Service.
Any move would affect roughly $550 million of outstanding debt, Moody’s said Tuesday night. Moody’s expects to complete the review within 90 days.
Moody’s downgraded Hartford on Oct. 7 to junk-level Ba2 and maintained its negative outlook.
Mayor Luke Bronin has said bankruptcy is a serious option for Connecticut’s capital city. City officials have solicited proposals for bankruptcy counsel, should Hartford file under Chapter 9.
“The review will focus on the city's prospects for sustainably balancing its financial operations,” Moody’s said in a statement. “Our review will also consider state funding to be provided to the city over the next two fiscal years that is incorporated in the biennial state budget to be adopted over the next several weeks.”
The Ba2 rating, according to Moody’s, accounts for the city’s financial weakness, high debt, escalating pension costs and large tax base of Connecticut’s capital city.
"Offsetting the economic benefits of being the state capital is the fact that more than half of the property in the city is tax-exempt since it is owned by the state or nonprofit institutions such as hospitals and colleges," said Alan Schankel, a managing director at Janney Capital Markets.
Bronin has asked the state for an additional $40 million in state aid. Lawmakers, however, remain gridlocked over a proposed biennial state budget of about $40 million for fiscal 2018 and 2019. Deficits continue to burden the state despite large tax increases in recent years.
S&P Global Ratings on May 15 lowered Hartford’s GOs to BBB-minus from BBB. S&P and Moody’s hit Hartford with two quadruple-notch downgrades late last year.
