Imagine if your credit score got reduced to junk status and you quickly understand how municipal bonds work. Joseph De Avila reports at the WSJ that Hartford, Connecticut has had its credit rating downgraded further into junk status as the city looks like it may default on its obligations as early as November. He writes:
S&P Global Ratings knocked down Hartford’s rating by four notches to CC. Moody’s Investors Service lowered its rating for Connecticut’s capital city by two notches to Caa3.
“The rating agency actions today reflect the reality we’ve been emphasizing for many months, which is that a truly sustainable solution for Hartford is going to require the participation of all stakeholders,” Hartford Mayor Luke Bronin said in a statement. “Our focus remains on one thing and one thing only: putting the city of Hartford on a sustainable path to long-term fiscal strength.”
Assured Guaranty Ltd., Hartford’s biggest bond insurer, said Monday it offered to help the city postpone payments on as much as $300 million in outstanding debt so it could avoid bankruptcy. Even with that help, city officials said Hartford would still need substantial and sustained revenue increases from the state of Connecticut.
The cash-strapped city faces a deficit approaching $50 million. City officials have said Hartford could file for bankruptcy as early as November if the state doesn’t step in and help.
Read more here.