"We base the outlook revision on a projected decline in financial reserves, despite a prolonged period of economic expansion and generally positive revenue trends," said Standard & Poor's analyst David Hitchcock.

Standard & Poor's revised its credit outlook on Massachusetts to negative from stable Nov. 23 citing a projected decline in financial reserves. Analyst David Hitchcock said in his report that reserves are at adequate levels now, but are expected to drop in the 2016 fiscal year. He said the state's AA-plus rating could be lowered over the two-year outlook horizon if "financial flexibility is impaired" from debt and retirement funding fixed costs.

"We base the outlook revision on a projected decline in financial reserves, despite a prolonged period of economic expansion and generally positive revenue trends," wrote Hitchcock.

S&P also revised its outlook on the Qualified Bond Act and Massachusetts State College Building Authority state aid intercept program bonds to negative from stable in tandem with the general obligation action. The ratings agency also affirmed its AA-plus rating on roughly $20.3 billion of parity GO debt outstanding and the A-plus rating on the commonwealth's moral obligation debt.

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