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New Jersey's Fourth Rating Upgrade Since March 2022, Surging Economy and Budget Surplus Propel Credit Rating to Soar.
Moody's Investors Service has upgraded New Jersey's issuer rating and its rating on the state's general obligation bonds to 'A1' from 'A2,' marking the fourth rating upgrade the state has received from a major ratings agency since March of 2022. The upgrade is attributed to the state's "solid economic recovery" and an "unprecedented level of budgetary surplus."
The new rating signifies the highest level in nearly a decade for New Jersey, reflecting Governor Phil Murphy's efforts in prioritizing surplus and long-neglected pension contributions.
"This upgrade from Moody's is further proof that the choices we've made to prioritize our surplus and our long-neglected pension contributions have paid off," said Governor Murphy. "We've achieved this sound financial footing while continuing to invest in the essential programs New Jerseyans rely on."
Treasurer Elizabeth Maher Muoio also praised the administration's diligent efforts to put New Jersey on a sound fiscal foundation.
"Governor Murphy's focus on making the full pension payment in each of the last three years, while at the same time paying down the State's outstanding debt and building a more sustainable surplus has paid dividends in the form of four credit rating upgrades in the past 13 months," Treasurer Elizabeth Maher Muoio said.
Moody's cited several reasons for the upgrade, including the state's solid economic recovery, with job gains leading the region and driving employment above the state's pre-pandemic peak. Additionally, New Jersey's commitment to full, actuarial pension contributions through fiscal 2024 (starting 7/1/2023) and its additional allocations of funds to a program to defease debt and cash-fund capital projects played a role in the decision.
The rating agency also lauded New Jersey's budget surplus, stating that it should position the state to respond to any economic dislocations caused by rising interest rates or other near-term conditions, while also maintaining the commitment to diligent long-term liability management.
In the past 13 months, New Jersey has seen a series of credit rating upgrades. In March of 2022, Moody's upgraded the state's general obligation bonds from 'A3' to 'A2,' followed closely by S&P, which upgraded its rating from 'BBB+' to 'A-.' In September, Fitch Ratings upgraded its rating to 'A' from 'A-.'
The credit rating upgrade is expected to positively impact New Jersey's borrowing costs and overall financial stability, further reinforcing the state's commitment to fiscal responsibility and economic growth.
