On Tuesday, September 12, Hartford is the latest financial strapped municipality that is facing downgrade with Moody’s Investors Service downgrading Connecticut’s capital city two notches. This places the city well into junk territory to Caa1 from B2.
The rating will ultimately have a staggering affect on the city. There is an expectation that further downgrades are likely said Moody’s in a statement. Moody’s cited last week’s statement by Mayor Luke Bronin that the 123,000 population will face complete insolvency in 60 days without state intervention. The Hartford, Connecticut Mayor says he will file for bankruptcy within 60 days.
"The rating further incorporates the city's commitment to restructuring its debt regardless of the state budget outcome and level of support [if any] from the state," said Moody's.
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Hartford has enlisted the aide of Greenberg Traurig LLP for advisement in determining the options that are available to the municipality, including Chapter 9 bankruptcy. The law firm has scheduled a Sept 25. conference call with bondholders.
"The rating also reflects the city's precarious liquidity position that could result in insufficient cash flow to meet upcoming debt obligations, which could result in a loss to bondholders," said Moody's.
Connecticut’s capital city has a $5.9 million debt service payment due Oct 1. In addition, it has a $21 million in tax anticipation notes that are due Oct. 31st.
"Additionally, the city has debt service payments in every month of the fiscal year, compounding the possibility of default at any time," said Moody's.
The Connecticut’s capital city is requesting an additional $40 million in aid from the state. Gov. Dannel Malloy and lawmakers have been unable to agree on a biennial budget which has lead to the state being run by executive order since July 1.