Fitch Ratings has raised its rating on New Jersey's general obligations bonds to A+ from A, the second ratings upgrade for the state in less than a week.
The ratings outlook is stable. The upgrade affects approximately $5 billion in general obligation bonds.
Fitch's action, announced Monday, follows a one-notch upgrade on April 6 by Moody's Investor Services to A1 from A2.
"Solid economic performance matched by robust revenue growth have helped New Jersey to shrink its liabilities," the Fitch report said. "New Jersey's credit quality will continue to benefit from inherent strengths including its very high wealth and the broad budget prerogatives common to states."
The report warned that the state's long-term liability burden "is elevated and well above that of most U.S. states reflecting outstanding debt and large net pension liabilities," the report said. However, "the burden has been declining, both due to directing excess resources to reduce new borrowing and improve pension contribution practices."
The state must be careful of circumstances that could lead to a downgrade such as "evidence that (its) ability to support high carrying costs within its budgetary framework, including making full actuarial pension contributions, is straining its operating performance," the report said.
Gov. Phil Murphy's proposed budget for the fiscal year starting July 1, 2023, called for a full actuarial contribution to the state pensions system. If the Legislature approves this budget, it will mark the third consecutive year of full actuarial pension contributions from the state.