S&P Global Ratings upgraded its rating on New Jersey’s general obligation bonds to A+ from A, citing the Murphy administration’s work to increase its surplus and reduce long-term liabilities.
S&P stated, “The upgrade reflects our view of the meaningful improvement in the state’s balance sheet reflecting management’s commitment to rein in its comparatively large debt and pension liabilities while striving to achieve a structural budget balance longer-term. Coupled with the maintenance of a healthy reserve balance, we believe the state has transitioned to an operating environment that is more predictable and stable, which strengthens management’s ability to address budgetary challenges as they arise. The outlook is stable for all ratings.
“The stable outlook on the state GO reflects our belief that New Jersey’s overall debt, pension, and OPEB liabilities are likely to remain comparatively high for the foreseeable future, albeit continuing to improve, leading to high fixed-cost carrying charges. It also reflects our expectation the state will continue to work toward achieving structural budgetary balance longer term. … Upward rating potential is limited at this point but would follow material progress in further reducing its long-term debt, pension, and OPEB liabilities, while retaining structural budget balance and maintaining healthy reserves.”
S&P previously raised New Jersey’s rating in March 2022 to A- from BBB+, and in April 2023 from A- to A, part of a string of seven upgrades the state received in 2022 and 2023.
“From making five consecutive full pension payments to narrowing our structural deficit to building a strong, reliable surplus to help weather economic volatility, we have made enormous strides to turn New Jersey’s fiscal ship around after decades of mismanagement from both sides of the aisle,” said Gov. Murphy.
“Today’s news of a credit rating upgrade from S&P is a testament to the hard decisions we’ve made to address the high levels of indebtedness that we inherited upon taking office. Although there is much more work to do by the next governor, I’m proud that we’ve done right by taxpayers by tackling long-standing fiscal challenges that stacked up over decades.”
This is the eighth credit rating upgrade the state has received during Gov. Murphy’s tenure. In April 2023, Moody’s boosted its rating to A1 from A2. Fitch followed suit, raising its rating to A+ from A. In May 2023, KBRA raised its rating from A to A+. Those upgrades followed upgrades from Moody’s, S&P and Fitch in 2022.
“Under Gov. Murphy’s leadership, our budgets have focused on building a state that is better positioned to meet its financial obligations, reduce its reliance on bonded debt and is better prepared to weather unforeseen fiscal challenges,” said New Jersey State Treasurer Elizabeth Maher Muoio. “Having changed the trajectory — from decades of credit rating downgrades to now eight upgrades under the Murphy administration — is validation that our state is in far better financial shape thanks to these efforts.”
You can read the full statement from S&P by clicking here.
