The city treasurer in Hartford said two negative bond-rating actions already this month could serve as wakeup calls in Connecticut's capital.
"While troubled by the actions of the rating agencies, the city is committed to addressing these concerns," Adam Cloud said after Standard & Poor's on Monday revised its outlook to negative from stable.
"The outlook revision is due to the city's diminished flexibility," said S&P, which maintained its AA-minus rating on Hartford's general obligation bonds. The city is projecting a nearly $14 million general-fund drawdown that S&P called "sizable," after state aid did not come in as expected. S&P in March had upgraded Hartford two notches from A, citing sensible budgeting and revised local GO criteria.
Moody's Investors Service on Oct. 2 downgraded Hartford GOs to A2 from A1, with a negative outlook, citing "narrow reserve levels that are expected to decline further" following the anticipated deficit. The negative outlook, said Moody's, reflects the possibility of further downgrades should the city not stabilize and augments its slim reserve levels.
"In order to address these concerns, it is critical that we adhere to the policy of maintaining a strong fund balance as recommended and that we focus on eliminating long-term budget deficits," said Cloud. "The treasurer's office will continue to support both the administration and the Court of Common Council in their efforts to achieve these goals."
Later this month, Hartford intends to sell $82 million of GO bonds and $50 million of GO bond anticipation notes. Proceeds will fund various projects city and school capital projects and take out the city's $56 billion BAN that it sold to Banc of America Preferred Funding Corp. in a direct-purchase transaction in April.
Moody's assigned a MIG 2 rating to the notes.
William Blair & Co. is lead manager. Robinson & Cole LLP is bond counsel. Shipman & Goodwin LLP is representing the underwriters. Murtha Cullina LLP is the city's disclosure counsel.
