S&P Global Ratings has raised New Jersey’s general obligation bond rating to A+ from A, highlighting the state government’s efforts to build its surplus and reduce long-term financial obligations. This marks the eighth credit rating upgrade for New Jersey since Governor Murphy assumed office.
In a statement, S&P said, “Against an ever evolving economic and policy backdrop clouded by uncertainty, we believe the state’s diligent work in rebuilding and preserving, to a degree, a stronger level of reserves while diligently addressing its large legacy liability challenges will help blunt budgetary pressure, as they arise.”
Governor Murphy commented on the upgrade: “From making five consecutive full pension payments to narrowing our structural deficit to building a strong, reliable surplus to help weather economic volatility, we have made enormous strides to turn New Jersey’s fiscal ship around after decades of mismanagement from both sides of the aisle. Today’s news of a credit rating upgrade from S&P is a testament to the hard decisions we’ve made to address the high levels of indebtedness that we inherited upon taking office. Although there is much more work to do by the next governor, I’m proud that we’ve done right by taxpayers by tackling longstanding fiscal challenges that stacked up over decades.”
A spokesperson added, “This eighth upgrade in just over three years is further independent confirmation that our continued efforts to strengthen New Jersey’s financial health have been a success. Under Governor Murphy’s leadership, our budgets have focused on building a state that is better positioned to meet its financial obligations, reduces its reliance on bonded debt, and is better prepared to weather unforeseen fiscal challenges. Having changed the trajectory – from decades of credit rating downgrades to now eight upgrades under the Murphy Administration – is validation that our State is in far better financial shape thanks to these efforts.”
S&P previously increased New Jersey’s rating in March 2022 from BBB+ to A-, and again in April 2023 from A- to A. These actions were part of seven total upgrades received by the state during 2022 and 2023.
Explaining its decision, S&P wrote: “The upgrade reflects our view of the meaningful improvement in the state’s balance sheet reflecting management’s commitment to rein in its comparatively large debt and pension liabilities while striving to achieve a structural budget balance longer-term. Coupled with the maintenance of a healthy reserve balance, we believe the state has transitioned to an operating environment that is more predictable and stable, which strengthens management’s ability to address budgetary challenges as they arise.”
Other major ratings agencies also upgraded New Jersey last year. In April 2023 Moody’s increased its rating from ‘A2’ to ‘A1’, Fitch raised it from ‘A’ to ‘A+’, and KBRA followed with an upgrade from ‘A’ to ‘A+’ in May 2023. These moves built on earlier upgrades issued by Moody’s, S&P and Fitch during 2022.
Before Governor Murphy took office, New Jersey experienced 11 credit downgrades under previous leadership.
