Thursday, August 18, 2011

New Jersey Goes Down, Too

After the credit rating of the United States suffered a downgrade at the hands of Standard & Poor's, now we have yesterday's news that our own state has been downgraded by one of the other of the three rating agencies, Fitch. Unlike the nation's downgrade, which was the first undertaken for the country as a whole, Fitch's action more or less brings it into harmony with the viewpoints of the other two agencies.

Fitch dropped New Jersey's rating for general-obligation bonds from AA to AA-minus, which means we fell from the third-highest possible rating to the fourth-highest. Although the rating services use slightly different nomenclature, we're at AA- for Standard & Poor's and Aa3 for Moody's, each designation being the fourth-highest rating.

Because of that, the effects of the Fitch downgrade will be muted. It might, however, reinforce another tick upward in the amount of interest the state has to pay on the bonds it floats - which could make it even harder for us to get out of our current fiscal mess.

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