New York-based credit ratings agency Moody’s Investors Service is slapping a lower rating on Pennsylvania’s debt for the second time in two years, as state government grapples annually with built-in budget deficits.
Monday’s downgrade of $11.1 billion general obligation bonds from Aa2 to Aa3 means Pennsylvania is ranked among the six worst states in Moody’s ratings for the 47 states with general obligation debt.
Moody’s cited Pennsylvania’s growing structural deficit and weak reserves. It also says the state’s modest economic growth is unlikely to keep up with its growing pension liabilities.
Fitch Ratings downgraded Pennsylvania last year, and Standard & Poor’s has warned it could downgrade Pennsylvania if it didn’t see significant strides to address deficits and pension liabilities.