Amid cuts in aid and surging taxes, it appears the market remains less than impressed at Connecticut's debt sustainability. Following last week's disappointing bond auction, CT bond risk has spiked to 65bps over the benchmark - a record spread demanded by investors to take CT repayment risk. CT becomes the 4th riskiest US state after NJ, IL, and PA.
As Bloomberg notes,
The likely culprit was the state’s $550 million general-obligation sale on March 17, which included debt due in 2026 that priced to yield 2.52 percent, compared with an expected 2.37 percent based on Bloomberg’s Connecticut index.
The state’s office of policy and management said last week that the budget deficit for the current fiscal year is $131 million, an increase of $111 million from the prior month’s estimate.
Moody’s Investors Service dropped its outlook on the state to negative earlier in March.
Is it any wonder more people than ever are looking to leave the increasing tax burden of this troubled state?