Hartford's bond rating has been downgraded by another rating agency. Just like Moody's did last year, Standard and Poor's Global ratings has the capital city listed as "junk bond status.”
S&P lowered Hartford's debt rating two points, from BBB- to BB. The downgrade means the city's bond status has dropped from investment grade into 'junk-bond' territory.
"The downgrade to 'BB' reflects our opinion of very weak diminished liquidity, including uncertain access to external liquidity and very weak management conditions as multiple city officials have publicly indicated they are actively considering bankruptcy," S&P Global Ratings credit analyst Victor Medeiros said in a release on Wednesday.
The city has hired an outside law firm to help initiate discussions with bondholders for concessions in order to implement a debt restructuring.
"Maintaining the CreditWatch with negative implication reflects our opinion of continued liquidity pressures related to whether the state will provide timely extraordinary aid to the city as outlined in the governor's proposed biennial budget and included in the city's adopted budget," Medeiros went on to say.
Hartford Mayor Luke Bronin released a statement on the downgrade on Wednesday morning.
“I have said for months that we cannot and will not take any option off the table because our goal is to get Hartford on the path to sustainability and strength," he said. "We are committed to achieving a comprehensive, long-term solution for the City of Hartford. That will require every stakeholder – from the State of Connecticut to our unions to our bondholders – to play a significant role. Today’s downgrade should send a clear message to our legislature, to labor, and to our bondholders that this is the time to come together to support a true, far-sighted restructuring.”
Bronin addressed the rating at a news conference on Wednesday.
"Yesterday's rating action was not a surprise," Bronin said.
According to Bronin, half of the city's properties are non-taxable. Bronin said the city relies heavily on state money that makes up for the places that can't be taxed. Right now, it's not there.
"The absence of a state budget magnifies this challenge tremendously," Bronin said.
Bronin said his plan hinges a lot on the state budget and the money that Hartford gets from it. Bronin said the following items could still be hammered out:
"There is a limit to how much you can cut before you aren't delivering on the basic obligations you have to your residents," Bronin said.
For residents in the city, Bronin said the downgrade shouldn't slow down the revitalization that's just beginning.
"Whether it's thousands of UConn students at the new downtown campus in the next couple of months, the Goodwin Hotel opening back up, the baseball stadium drawing sellout crowds every weekend," Bronin said.
Dr. Farhad Rassekh, who is an economics professor at the University of Hartford, agrees that if promises of no more cuts and no more borrowing are kept, residents shouldn't feel the impact from the downgrade as long as the city can show creditors they are on the rebound.
"They need to convince the rest of the country that they're serious about balancing the budget and creating a business friendly atmosphere in this state," Rassekh said.
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