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July 23, 2015

Fitch warms to CT as $500M debt-issue looms

[Editor's note: This story was updated Thursday afternoon to include information about Fitch's upgrade of Connecticut's outlook.]

Connecticut taxpayers got some good credit news Thursday that likely will save them money on a slated $500 million state bond sale on Aug. 4, the state treasurer says.

Treasurer Denise L. Nappier announced that Wall Street credit-rating agency Fitch Ratings has lifted its negative outlook on the state’s general obligation (GO) credit rating. Fitch restored a stable outlook and affirmed its AA rating on the GO debt.

Two other credit rating agencies — Moody’s Investors Service and Kroll Bond Ratings — kept their ratings of Aa3 and AA, respectively, with stable outlooks for Connecticut’s GO bonds, Nappier said in a statement. Standard & Poor’s maintained its AA rating, with a negative outlook, first put in place in March of this year.

Debt ratings are bellwethers of Wall Street’s comfort -- or not -- as to the ability of municipal and corporate borrowers to repay their investors. Strong ratings usually lead to lower rates of interest on bond issues, which saves borrowers money. Ratings also can attract or repel investors.

“Fitch’s independent review validates what my office has been saying for some time -- that the state’s economy as a whole has made tremendous progress,’’ she said. “The commitment to fully funding long-term liabilities and to a structurally balanced budget is paying off.’’

Half the debt to be issued in the Aug. 4 GO bond sale will be tax-exempt bonds; the remaining $250 million will be taxable bonds.

After the sale, Nappier said proceeds will be allocated as follows: $134.3 million for various housing programs; $119.1 million in economic development related to manufacturing assistance; $69.2 million in state grant programs; $56.4 million in municipal grants; $29.2 million for the Housing Trust Fund; $21.2 million to fund various state building projects; $20 million for Town Road Aid; $20 million to nonprofit health and human services providers; and $10 million for the Small Town Economic Assistance Program.

In addition, $20.6 million of the proceeds will fund construction of a new Sandy Hook School in Newtown.

Law firms Day Pitney LLP and Finn Dixon & Herling LLP are disclosure counsel for the GO sale. Law firms Robinson & Cole LLP and Soeder & Associates LLC are tax counsel. Acacia Financial Group Inc. and A.C. Advisory Inc. are financial advisors for this sale.

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