Connecticut Capital Hartford Downgraded To Junk By Moody's

Tyler Durden's picture

Just two days after S&P downgraded Hartford to junk, Moody's has piled on, pushing the Connecticut State capital below investment-grade due to "the increased likelihood that the city will pursue debt restructurings to address its fiscal challenges."

One week ago, Illinois passed its three year-overdue budget in hopes of avoiding a downgrade to junk status, however in an unexpected twist, Moody's said that it may still downgrade the near-insolvent state, regardless of the so-called budget "deal." In fact, a downgrade of Illinois may come at any moment, making it the first U.S. state whose bond ratings tip into junk, although as of yesterday, credit rating agencies said they were still reviewing the state's newly enacted budget and tax package. The most likely outcome is, unfortunately for Illinois, adverse: "I think Moody's has been pretty clear that they view the state's political dysfunction combined with continued unaddressed long-term liabilities, and unfavorable baseline revenue performance as casting some degree of skepticism on the state's ability to manage out of the very fragile financial situation they are in," said John Humphrey, co-head of credit research at Gurtin Municipal Bond Management.

And yet, while Illinois squirms in the agony of the unknown, another municipality that as recently as a month ago was rumored to be looking at a bankruptcy filing, the state capital of Connecticut, Hartford, no longer has to dread the unknown: following S&P's downgrade to junk on Tuesday, Moody's just shifted Hartford's GOs to B2 from Ba2, with a negative outlook.

Excerpted Moody's note:

Moody's Investors Service has downgraded the City of Hartford, CT's general obligation debt rating to B2 from Ba2. The outlook is negative.

 

The rating was placed under review for possible downgrade on May 30, 2017. The par amount of debt affected totals approximately $550 million.

 

The downgrade reflects the increased likelihood that the city will pursue debt restructurings to address its fiscal challenges. Last week, the city hired a law firm to advise it on debt restructurings. City management has made public statements indicating they will need to have discussions with bondholders about restructuring its debt regardless of the outcome of the state's biennial budget as debt service costs escalate sharply leading to budget deficits over the next five years.

 

The rating also reflects the city's challenging liquidity outlook in the current fiscal year and weak prospects for achievement of sustainably balanced financial operations. The city currently projects a fiscal 2018 deficit of $50 million and is seeking incremental funding from the state to close that gap. The state has not yet adopted a budget specifying aid for the city for the fiscal year beginning July 1. Even if the state's biennial budget allocates sufficient funds to address the current and following years deficits and create a fiscal oversight structure, the budget is still unlikely to provide a pathway to structural balance over the longer term. City deficits, partially attributable to escalating debt service costs, are projected to grow to $83 million by 2023, making the city's weak financial position vulnerable to further deterioration.

 

Rating Outlook

 

The negative outlook reflects the possibility that the city will restructure its debt in a way that will impair bondholders. The outlook also incorporates uncertainty over state funding in the current fiscal year and beyond and the associated impact on reserves, liquidity and the ability to achieve sustainably balanced operations.

In short: the capital of America's richest state (on a per capita basis), will - according to both S&P and Moody's - be one of the first to default in the coming months.

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D Nyle's picture

As Long as Libtards are getting Fucked, this is a Great thing

Erek's picture

Get Sanford and Son to take all that junk away.

Silver Savior's picture

Even they won't want that shit.

peopledontwanttruth's picture

The first 3 letters of the state gave it away.

knukles's picture

Only now with an even lower junk rating will the socialists find out just how expensive past profligate spending policies can be.
Reality sucks, don't it.

peopledontwanttruth's picture

Knuckles sad but I believe this time it will be like being a passenger on a plane that's going down even though you weren't one of the highjackers There will be plenty of pain whether agreed on it or not

Bigly's picture

This is correct.

I hate debt and have none but will pay for the statists' ridiculous pet projects and bloated union /govt. pensions.

CheapBastard's picture

I hate uncertainty. Just go ahead and downgrade all Dem-governed states to junk and get it over with.

MANvsMACHINE's picture

Uncertainty?  What are you talking about?

peopledontwanttruth's picture

Cheap this will spread like cancer to every part of the body. It's in the lymph nodes now.

Silver Savior's picture

Spreading to a town near you.

lasvegaspersona's picture

Here is a question....would you rather have the promise of a government pension or a lesser stack of gold coins?

The pension you can be sure you'll get...but not sure if it will have vaalue.

Silver Savior's picture

I would take the gold coins so I don't have to worry.

JohnGaltUk's picture

The libtards are cry babies and will still put capitalism on the hook.

Turkeys voting for Christmas

Kidbuck's picture

I think all the Hillary states thought the stinky beast would get elected, so they have been over spending and over promising in anticipation of her bailing them out. It must suck to lose all hope that mommy won't save you. This explains a lot of the hate Trump movement.

Silver Savior's picture

In junk I trust, in one quadrillion dollar bill I trust, In bigotry I trust.........

Erek's picture

I'll stick to trusting junk silver.

aliens is here's picture

Junk it is. USSA should have a junk rating.

lasvegaspersona's picture

At least CT is a rich state. They still have rich to eat.

Stan Smith's picture

Im always amused by the concept that avoiding bankruptcy is a good thing.    In the context of what we're dealing with here,  it's a plus, not a negative.

You can't dispute how they got here.    Spending money they dont have -- and thinking that lasts forever -- is the bane of all existence, at least in governmental entity sense.  

Even if the municipality, county, or state I lived in was facing it,  I'd welcome it, assuming it was needed.    And if there's talk about it,  it's well past the point of needing it.

Bankruptcy is the closest thing to the "RESET" button we have out there.    Me thinks we need it more often to be honest.   It's the only way the .gov types keep their hands off our money.

brushhog's picture

Its not good if you're a bond holder. You loaned the state money, and they are blowing off their obligation to you. Its not a good thing at all. And its the exact opposite of .gov keeping its hands off your money. They got somebodies money and they are not going to repay it. After the bankruptcy, borrowing costs will go up and guess who's taxes will be paying for that?

are we there yet's picture

Debt is a drug for municipalities. Pay as you go is the only prudent accounting policy unless there is a catastrophic emergency that is not bank induced. Rothchilds got rich on induced indebtedness.

GodHelpAmerica's picture

110,000 inhabitants have been downgraded to junk.

TOMMYV's picture

Don't worry, liberals will move to nice conservative states and destroy them too.

pparalegal's picture

Like Oregon (portland?) after the California progressive cancer destroyed their state then did the carpetbagger thing when they saw the results.

vato poco's picture

Oregon, Washington, Nevada, Colorado ... working real hard on fucking up Idaho & Montana & Arizona ...

directaction's picture

This is the start of the Great Satan crumbling.

Please, let the other Dominoes fall soon

I am Jobe's picture

Yale is so proud. One by one one state at a time. LaLa Land 

Never One Roach's picture

Yale is a wonderful place....unless your beautiful 24 year old daughter is strangeld to death, broke to pieces and stuffed inside the wall there:

 

Yale grad’s bones broken to fit in hole

 

http://nypost.com/2009/09/21/yale-grads-bones-broken-to-fit-in-hole/

 

https://en.wikipedia.org/wiki/Murder_of_Annie_Le

 

 

e_goldstein's picture

I'm sure they have insurance for that.

/s/

IridiumRebel's picture

Own a house in CT. Can't give it away.
Hope they shit the bed.

detached.amusement's picture

hang on, let me dump mine first and gtfo this forsaken place

Bigly's picture

There is more than a handful of ZH posters who are in this pity party in CT.

Maybe we can get a group therapy rate.....

pparalegal's picture

Hate to say I told you so.

Margaret Thatcher

JohnGaltUk's picture

Where is a Maggie Thatcher when we need one.

WillyGroper's picture

covering for elite pedos in hell.

WTF do folks invoke this woman's name?

her actions override her sound bytes.

A. Boaty's picture

Hate to say I told you so.

Meredith Whitney

Iconoclast421's picture

CT can no longer afford to keep paying for "Truman Towns" like Sandy Hook.

johand inmywallet's picture

We left CT. in 2013 and moved to the country in North Carolina, Moore county, home of golf. We actually made about 50K on the sale in CT. Life was really beginning to suck post 2008 in CT. and it shit the bed in 2012 for us. We GTFO~!!! I hate to say it, but I told many a person the state was going to bankrupt, they all thought I was nucking futts! Oh well.

Never One Roach's picture

That's a nioce part of NC. Many areas are still nice but some have turned into super-ghettoes and are not so great. Even Chapel Hill has gone down hill somewhat due to their fanatic liberal policies and soft on crime approach:

 

UNC Student Body President Eve Carson Begged Captors to Pray With Her Before They (two dindus) Killed Her (shooting her in the head), Says Murder Trial Witness

 

http://abcnews.go.com/blogs/headlines/2011/12/unc-student-eve-carson-beg...

xxxxxxxxxxxxxxxxxxxxxxxxxxxx

 

Pair of dindu felons charged in UNC professor's death (beating him to death) were recently released from jail

 

http://www.wral.com/unc-professor-dies-after-chapel-hill-mugging/13840540/

 

snakedogs's picture

Congratulations to the Democratic Communist Party for making another shithole. Members of the city council consist of 6 Democrats and 3 Working Families Party ( Marxists). Republicans make up 3% of the voters (smart) to get out of this ghetto. "Only Flint, Michigan, Gary, Indiana, Saint Louis, and Baltimore experienced larger population losses during the decade. " Great job scumbag commies!

JohnGaltUk's picture

Martin Armstrong is a bloody genius. His forecasts are amazing, I would like to welcome you all to Big Bang.

moorewasthebestbond's picture

Aren't these the same rating agencies that said Mortgage Backed Secrurities were A+++ SOLID GOLD???

oDumbo's picture

You're insinuating CT bonds are not junk?  Your head must go all the way round.

Too-Big-to-Bail's picture

The Connecticut pension funds should have been invested in them there safe derivatives thingys then this would never have happened