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Connecticut GO bond deal tops modest issuance week
March 24, 2017 / 9:41 PM / 9 months ago

Connecticut GO bond deal tops modest issuance week

SAN FRANCISCO, March 24 (Reuters) - Connecticut will return to the U.S. municipal market on Tuesday when it will sell $750 million in general obligation bonds as the state faces negative outlooks from two of the three biggest Wall Street credit rating agencies.

S&P Global Ratings on Tuesday rated the bonds AA- with a negative outlook due to the state’s above-average debt, high unfunded pension liabilities and large unfunded postemployment benefit liabilities.

Credit ratings agency Moody’s assigned the bonds Aa3 with a negative outlook, while Fitch assigned the bonds a AA- rating with a stable outlook.

The northeast state is struggling to close a $1.7 billion budget hole for fiscal 2018.

To address the gap, Governor Dannel Malloy last month proposed nearly $1.4 billion of spending cuts, including big savings from negotiations with labor unions, to fill the budget hole.

Next week’s tax-exempt calendar is modest with $5.8 billion scheduled to hit the market, an amount that is shy of the weekly average of $6 million, according to according to Municipal Market Data, a Thomson Reuters unit.

On Monday, the city of San Jose, California will offer $641 million in airport revenue refunding bonds and the New Jersey Turnpike Authority will offer $525 million in bonds in a deal managed by Goldman Sachs.

After three straight weeks of outflows, U.S. municipal bond funds posted inflows of $173 million for the week ended March 22, according to data from Lipper, a Thomson Reuters company.

Congressional leadership and the White House chose not to bring the Republican health care bill up for a vote, paving the way for President Donald Trump to push a tax-reform package, which could find better reception in Congress.

The prospect of Congress turning its attention to tax reform left bond market buyers tentative, according to Randall Smolik, an analyst with Municipal Market Data, a Thomson Reuters unit. (Reporting by Rory Carroll; Editing by Cynthia Osterman)

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