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S&P Global Downgrades New Jersey’s Bond Rating

Sweeney & Prieto

Pension liabilities and revenue loss from lower taxes are cited

Updated Nov. 14, 2016 6:18 p.m. ET

S&P Global Ratings cut its rating for New Jersey’s general-obligation bonds Monday, marking the state’s 10th credit downgrade under Republican Gov. Chris Christie.

The downgrade stemmed from the state’s rising pension liabilities along with an expected drop in revenue as part of a transportation-funding package signed by Mr. Christie, said David Hitchcock, senior director at S&P Global.

The New York ratings, data and index firm lowered New Jersey’s credit rating to “A-” from “A” and assigned a negative outlook.

“Just as the state is pushing off some of their pensions costs into later years, they are also pushing off some of their revenue loss into later years,” Mr. Hitchcock said. “It’s adding incremental pressure.”

Credit ratings help determine the interest rates that states pay when they sell bonds; a lower credit rating means higher borrowing costs.