A bond rating agency has downgraded New Haven’s rating, citing the city’s depleted cash reserves, high debt and long-term employee benefit costs.
City spokeswoman Anna Mariotti released that information after 5 p.m. Friday.
Fitch, the rating agency, downgraded the city from “A+” to “A.” That rating applies to about $510 million in outstanding general obligation bonds issued by the city. Read the report here.
Lower bond ratings can increase the cost of borrowing by New Haven and make investors wary of trusting their money with the city.
New Haven is rated by two other agencies, Moody’s and Standard and Poor’s, at A1 and A‑, respectively. Moody’s lowered its “outlook” on the city in 2011.
“Among reasons cited for the downgrade, Fitch listed the City’s limited financial flexibility due to low reserve levels; the fact that State aid budget cuts could dramatically impact the City’s revenue; above average City debt ratios and high future retiree costs,” Mariotti wrote in the release.
The “key rating drivers” listed by Fitch include the city’s projected deficit for the current fiscal year, uncertainty about the state budget, high — but stable — debt ratios, and high predicted retiree costs.
“We need to put this into perspective given the current state of the economy — both the State and Federal government recently received downgrades.” said city Budget Director Joe Clerkin. “The move by Fitch was not terribly surprising and is a fair read of fund balance deterioration. That said, the City needs to ensure that we move forward with labor agreements that the taxpayers can afford, that are fair to employees and that are mindful of current market conditions.”