Connecticut slapped with double debt downgrade

(Reuters) - Two ratings agencies downgraded Connecticut's debt on Thursday, saying severe economic and budgetary problems had left the state ill positioned to weather a future national economic downturn.

Both Fitch Ratings and Standard & Poor's downgraded Connecticut's general obligation (GO) bonds to 'AA-' from 'AA', still a high investment grade, with a stable outlook.

Last week, Connecticut's lawmakers adopted a $19.7 billion budget that closed a funding hole of nearly $1 billion in the 2016-17 fiscal year that begins July 1. The state has seen income tax revenue forecasts fall as a result of weak stock market performance.

Connecticut has experienced "chronic economic and fiscal challenges during the current expansion" and as a result its scope to address future downturns has been reduced, Fitch said.

Connecticut will sell $510 million in general obligation bonds in the next week. The state pays a premium to borrow money over top-rated states because of its fiscal problems. Connecticut also has one of the worst funded public pension systems in the country.

Treasurer Denise Nappier said the message was clear. "It is high time for a sustained commitment to fortify the State’s financial footing, in the midst of persistent economic uncertainty," she said in response to the downgrades.

(Reporting by Shashwat Awasthi in Bengaluru; Editing by Sriraj Kalluvila and Alistair Bell)

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