In the latest blow from the capital markets to Connecticut's capital city, S&P Global Ratings late Tuesday lowered its general obligation rating on Hartford's bonds two notches to junk-level BB from BBB-minus.
Moody's Investors Service already has the city's bonds at speculative-grade Ba2, and has the city on review for yet another downgrade.
"The downgrade to BB reflects our opinion of very weak diminished liquidity, including uncertain access to external liquidity and very weak management conditions as multiple city officials have publicly indicated they are actively considering bankruptcy," said S&P credit analyst Victor Medeiros.
Hartford, on the brink of insolvency, hired Greenberg Traurig LLP as restructuring counsel, Mayor Luke Bronin announced last week.
S&P also lowered its rating on the Hartford Stadium Authority's lease revenue bonds to BB-minus from BB-plus. The ratings remain on credit watch with negative implications, where S&P placed them on May 15.
Bronin has asked Connecticut for an additional $40 million in aid, but the state, also caught in a whirlwind of downgrades, has been operating without a fiscal 2018 budget.
The city's budget woes arise in part because a significant portion of its real estate does not pay property taxes because it is owned by the state, said bankruptcy attorney Michael Sweet, a partner with Fox Rothschild LLP.
"So, they don’t have the types of resources available because they don’t have the tax base," he said.
In addition, said Sweet, "there’s a question of the state helping out while they’re dealing with their own budgetary issues.”