Connecticut to sell first public issuance since rating downgrade

By Stephanie Kelly

NEW YORK (Reuters) - Connecticut will offer $850 million of bonds and notes next week, the state's first public issuance of general obligation bonds since being downgraded earlier this year by all three major credit rating agencies to the single-A level.

The deal, made up of $450 million of taxable bonds and $400 million of tax-exempt bond anticipation notes, will be sold in competitive bidding on Monday. The bonds are structured with serial maturities from 2019 through 2028, while the notes mature in September 2018, according to the deal's notices of sale.

Credit agencies Moody's Investors Service, S&P Global Ratings and Fitch Ratings downgraded Connecticut in May because of the state's large revenue slump and mounting economic weakness.

As the state struggled to pass a budget over the summer, the yield spread for tax-exempt 10-year Connecticut bonds over Municipal Market Data’s benchmark triple-A yield scale widened to as much as 92 basis points in July. The credit spread has narrowed to 70 basis points as of the close on Thursday.

A two-year budget was enacted in October, nearly four months after the July 1 start of the fiscal 2018-19 biennium.

Moody's, which rated the taxable GO bonds at A1 in a statement released Tuesday, pointed to the state's high unfunded pension liabilities and debt outstanding.

"The rating also reflects a lagging economy that is highly dependent on volatile revenue sources, recent consecutive years of population loss and minimal reserve levels," the statement said.

(For a graphic on State of Connecticut 10 year GO yield spread, click http://reut.rs/2kb3Qq5)

(Reporting by Stephanie Kelly; Editing by Daniel Bases and James Dalgleish)

---

Serious News for Serious Traders! Try StreetInsider.com Premium Free!

---

You May Also Be Interested In

• Tens of thousands ordered to evacuate in Nevada as fire threatens Reno
• ECB chief Lagarde 'ready to serve' WEF, Swiss newspaper reports
• Landslide at Guinea landfill kills 30, government says