NJ Gets 3 More Credit Rating Upgrades

NEW JERSEY — New Jersey has received three credit rating upgrades in the past week, as ratings services note the state's "resilient" fiscal position following years of downgrades which hampered the state's borrowing power.

The most recent upgrade was from S&P Global Ratings, who upgraded its rating on New Jersey’s general obligation bonds from "A-" to "A" on Wednesday.

Fitch Ratings upgraded NJ's Issuer Default Rating (IDR) to "A+" on Monday, and Moody's Investor Services upgraded the state’s rating from "A2" to "A1" last week. These ratings measure the health of a state's economy, as well as a state's ability to pay its debts.

"The upgrades reflect better pension funding levels and improved structural balance, largely the result of an anticipated third consecutive year of full actuarial pension contributions in fiscal 2024," said S&P Global Ratings credit analyst David Hitchcock in a news release.

The upgrades come as the state is preparing to issue more than $1 billion in bonds for school facilities construction projects, which Fitch assigned an "A" rating to. Also, this week, New Jersey state legislators began their review of Gov. Phil Murphy's proposed $53.1 billion budget for the next fiscal year — which starts this July.

"New Jersey has effectively used the fiscal momentum of recent years to accelerate progress on its long-term fiscal and liability challenges," said Fitch on Monday. "Solid economic performance matched by robust revenue growth have helped New Jersey to shrink its liabilities."

Fitch and Moody's also took notice of NJ's move toward a record surplus and said the state has a "stable outlook."

"An unprecedented 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," Moody's wrote, adding that New Jersey remains "subject to long-term liability and fixed-cost burdens much more substantial than those of most other states."

Fitch did not give New Jersey a credit upgrade from 1992 until late last year, and the state's general obligation bonds were continually downgraded from 2005 until 2022. You may view the state's full credit history here.

Murphy and State Treasurer Elizabeth Maher Muoio touted the work the Democrat's administration had done making pension payments and dedicating money to reducing state debt.

“By making the full pension payment for the third year in a row and dedicating more money to reducing our debt, we have signaled that the days of ignoring our long-term commitments in favor of short-term benefits are over," Murphy said.

Moody's, Fitch, and the S&P all upgraded the state's ratings last year.

“With our fifth rating upgrade in just over a year, the ratings agencies have signaled that New Jersey is back on a steady financial course,” added Muoio. “It’s more clear than ever that the moves we’ve made to pay down our debt, increase our surplus, and make our required pension payments are paying off.”