HARTFORD, Conn. – Underperforming pension systems and limited state flexibility are pressuring Massachusetts municipalities, according to S&P Global Ratings.

These and other developments could offset credit strengths and factors such as such as Massachusetts' technology boom and housing market strength, S&P said in an Oct. 19 report.

According to S&P's last count, 28.4% of the commonwealth's issuers were rated AAA, 33.6% were AA-plus and only 3.8% were A-plus or lower. Above-average economic indicators, said S&P, included income levels generally 1.3 times national levels and per capita-market values that average 63% higher than those of the nation.

Warning signs, said S&P, include underfunded and low-performing pension and other postretirement systems, and a backlog of infrastructure needs and limited state-level reserves.

"We also note that an aging population in some Massachusetts communities may put pressure on ratings," S&P said. "Due to a confluence of these factors, we believe ratings will remain stable or decline slightly over the medium term."

S&P and Fitch Ratings assign AA-plus ratings to the state's general obligation bonds. Moody's Investors Service rates them an equivalent Aa1.

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