Standard & Poor's Ratings Services revised its outlook on New Jersey's Qualified Bond Act Program to negative from stable, based on its recent outlook revision on New Jersey's general obligation (GO) debt (A/Negative). At the same time, Standard & Poor's affirmed its 'A-' rating on the program. The rating on bonds guaranteed under this program moves in conjunction with the state GO rating.
New Jersey's Qualified Bond Act Program is authorized by New Jersey Statute 18A:24-93, which allows the state treasurer to intercept a portion of city, township, and other local municipalities qualified state aid to pay debt service on qualified bonds directly to the trustee. To qualify for this program, the issuer municipality must receive state approval for the planned capital improvements and the scheduled debt service.
The state treasurer forwards withheld amounts to the paying agent for payment of debt service on or before each principal and interest payment date. The balance of this state aid is then remitted to the appropriate municipalities. Additionally, Standard & Poor's requires the municipalities' state revenue to equal at least 1x maximum annual debt service.
The negative outlook on the Qualified Bond Act Program reflects our negative outlook on New Jersey.
