S&P Global Ratings raised its rating on New Jersey's general obligation bonds to A from A-, making it the third firm this month to issue a one-notch increase in New Jersey's bond rating.
S&P's action reflects "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 David Hitchcock, S&P Global Ratings credit analyst, in a Wednesday news release. The outlook is stable.
Fitch Ratings upgraded the state's general obligations bonds on April 10 and Moody's Investor Services raised its rating on April 6.
New Jersey contributed its full actuarially required contribution to the state pension system for the fiscal year ended June 30, 2022, and it is doing so during the current fiscal year. Gov. Phil Murphy's proposed budget for the fiscal year starting July 1, which requires approval by the legislature, also calls for full funding for the pension system.
"Should the state make further progress reducing its long-term debt, pension, and other postemployment benefit liabilities, while retaining structural budget balance, we could raise the rating or revise the outlook upward," the S&P news release said.
"If the state should revert to structurally unbalanced budgets, as experienced during the many years it contributed less than actuarial recommendations to its pension funds, or as it did in fiscal 2021 when it sold a large GO (general obligation) bond issue to fund operations, we could downwardly revise the state GO outlook or rating," the news release warned.