S&P Global Ratings has upgraded New Jersey’s general obligation bonds from stable to positive, the second major ratings agency to give New Jersey a betting outlook in the last few weeks.
Moody’s Investor Services moved the state from stable to positive as well.
Gov. Phil Murphy, who is up for re-election this year, said New Jersey is getting “our fiscal house in order.”
“Making the first full contribution to the pension system in 25 years, and paying off a sizable amount of current debt while avoiding future debt, proves we can return New Jersey’s financial footing to solid ground, all while remaining committed to our values and investing in our people,” Murphy said.
State Treasurer Elizabeth Muoio cited controlling healthcare costs building a surplus as a major reason for the upgrade.
“The outlook revision reflects our view that the decisions made by the state on how to spend surplus revenues in fiscal years 2021 and 2022 could position New Jersey to materially improve its long-term liability profile,” said Tiffany Tribbitt, an S&P Global Ratings credit analyst. “Specifically, efforts to improve pension funding could result in maintenance of a combined funded ratio of more than 40%, which we consider supportive of a higher rating.”
But S&P cited several weaknesses, including a large structural operating deficit and unfunded pension liability, and a high debt burden.
This story was updated at 3:41 PM with a headline that more accurately reflects the story.