New Jersey Receives Ratings Upgrade Over ‘Solid' Recovery

By Christian Wade | The Center Square contributor, The Center Square New Jersey

April 7, 2023

(The Center Square) — A Wall Street credit rating firm has bumped up New Jersey’s score for its general obligation bonds, citing the state’s “solid” post pandemic economic recovery.

Moody’s Investors Service on Thursday upgraded New Jersey’s issuer rating and its rating on the state’s general obligation bonds to ‘A1’ from ‘A2' as the state prepares to issue more than $800 million in bonds next week for school construction and transportation projects.

Moody's, one of three major Wall Street credit rating agencies that grade government-issued debt, said the upgrade also reflects New Jersey's "solid economic recovery" and “an unprecedented level of budgetary surplus" that have improved its fiscal outlook.

"An unprecedented level of budgetary surplus should position the state to respond to any economic dislocations caused by rising interest rates or other near-term conditions, while also maintaining the commitment to diligent long-term liability management," the agency wrote.

New Jersey also got high marks from the ratings agency for its "commitment to full, actuarial pension contributions" through fiscal year 2024, and its "additional allocations of funds to a program to decrease debt and cash-fund capital projects."

Still, the agency noted New Jersey remains "subject to long-term liability and fixed-cost burdens much more substantial than those of most other states."

Gov. Phil Murphy boasted that the ratings upgrade was a sign his administration's efforts to "prioritize our surplus and our long-neglected pension contributions" are paying off.

"We’ve achieved this sound financial footing while continuing to invest in the essential programs New Jerseyans rely on," Murphy said in a statement.

The upgrade is the fourth from Wall Street ratings agencies over the past year, which have recognized New Jersey's economic recovery following years of downgraded ratings.

In March 2022, Moody’s upgraded the state’s general obligation bonds from ‘A3’ to ‘A2,’ followed closely by S&P, which upgraded its rating from ‘BBB+’ to ‘A-.’ In September, Fitch Ratings upgraded its rating to ‘A’ from ‘A-', according to the agency.

The state's bond credit rating affects how much it pays in interest when it borrows money, which can drive up costs for projects — and to taxpayers.

Treasurer Elizabeth Maher Muoio said the upgrades are "a testament to the administration’s diligent efforts to put New Jersey on a sound fiscal foundation."

The focus of the work of The Center Square New Jersey is state and local-level government and economic reporting that approaches stories with a taxpayer sensibility.