Moody’s Investors Service downgraded New Haven, Conn.’s general obligation bonds to A3 from A2, affecting about $510 million of outstanding debt. The outlook remains negative.
It’s the second downgrade of the city by Moody’s in four months. The rating company dropped New Haven from A1 in June.
Concurrently, Moody assigned an A3 rating to $37.75 million of Series 2013B GO bonds, it said in an announcement late Friday This issue, as well as all of the city’s outstanding general obligation bonds are secured by an unlimited tax pledge.
A message was left with Mayor John DeStefano’s office seeking comment.
“The downgrade reflects the continued deterioration of the city’s financial position resulting from a deficit in fiscal 2012 and a larger-than-anticipated deficit in fiscal 2013,” Moody’s said in its statement.
The A3 rating, according to Moody’s, also incorporates the city’s sizeable tax base which is anchored by higher education and healthcare, and a highly leveraged debt burden.
Further, the rating factors the city’s sizeable liabilities for pension and other post-employement benefits.
New Haven, home to Yale University and Yale-New Haven Hospital, is Connecticut’s second-largest city with a 130,000 population.
Fitch Ratings in August downgraded New Haven to A-minus from A.