NJ Spotlight: In major hit to NJ’s credit rating, Wall Street agency lowers state’s bond grade - Garden State Initiative

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NJ Spotlight: In major hit to NJ’s credit rating, Wall Street agency lowers state’s bond grade

November 6, 2020

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By John Reitmeyer

New Jersey’s credit rating has taken a significant hit from a major Wall Street rating agency as the state is preparing to borrow more than $4 billion to sustain the budget during the coronavirus pandemic.

Citing concerns about “significant structural deficits,” S&P Global Ratings announced Friday that it has lowered New Jersey’s credit rating for general-obligation bonds by one notch, to “BBB+.”

The S&P downgrade comes as Gov. Phil Murphy’s administration is preparing to issue $4.29 billion in new debt without voter approval to help offset revenue losses triggered by the health crisis. The debt sale is currently planned for Nov. 18, Department of Treasury officials said Friday.

While credit-rating downgrades can be politically embarrassing for a sitting governor, they can also lead to higher borrowing costs that ultimately are passed along to taxpayers whenever the state has to issue long-term bonds, as it is preparing to do later this month.

Earlier this year, New Jersey’s credit grade was lowered one notch by Fitch Ratings, another major Wall Street rating agency, after the state disclosed its brewing budget problems.

Read the full article here.