KBRA assigns a long-term rating of AA+ with a Stable Outlook to the State of Connecticut: General Obligation Bonds (2024 Series A); General Obligation Bonds (2024 Series B) (Social Bonds); and, General Obligation Refunding Bonds (2024 Series C) (Social Bonds). KBRA additionally affirms the long-term rating of AA+ with a Stable Outlook for the State's outstanding General Obligation Bonds.

Key Credit Considerations

The rating actions reflect the following key credit considerations:

Credit Positives

• State is projected to complete FY 2024 with a BRF balance exceeding the statutory cap at 15% of general fund appropriations and is positioned to direct surplus resources toward supplemental pension contributions for a fifth consecutive year.
• Strong financial management framework and recent extension of enhanced statutory fiscal guardrails through at least FY 2028 position the State for strong operating results.
• Strong wealth levels with the highest per capita personal income level among all states.

Credit Challenges

• Lower relative growth in the economic indicators of population, employment, and gross state product, although there are recent signs of growth in population.
• Unfunded pension liabilities and tax-supported debt burden are high relative to personal income, each more than 3x the respective U.S. average. However, the State borrows for many local purposes and the comparison on a combined state and local basis is more moderate.

Rating Sensitivities

For Upgrade

• Significant improvement in the funded ratios for the State’s pension systems.

For Downgrade

• Structural operating deficits in the general fund.
• Sustained weakening in the State’s employment base and economic activity.

To access rating and relevant documents, click here.

Methodologies

Public Finance: U.S. State General Obligation Rating Methodology

ESG Global Rating Methodology

Disclosures

A description of all substantially material sources that were used to prepare the credit rating and information on the methodology(ies) (inclusive of any material models and sensitivity analyses of the relevant key rating assumptions, as applicable) used in determining the credit rating is available in the Information Disclosure Form(s) located here.

Information on the meaning of each rating category can be located here.

Only those ratings on securities issued by this Issuer that also are denoted on the Security Ratings tab for this Issuer on KBRA.com as “endorsed” by Kroll Bond Rating Agency Europe Limited into the European Union and/or by Kroll Bond Rating Agency UK Limited into the UK are covered by the disclosures set forth in this press release and the corresponding Information Disclosure Form. No other ratings on issuances by this Issuer have been endorsed into the European Union or the UK, and the disclosures set forth herein and in the corresponding Information Disclosure Form are inapplicable to those ratings and may not be used for regulatory purposes by European Union or UK investors in these securities.

Further disclosures relating to this rating action are available in the Information Disclosure Form(s) referenced above. Additional information regarding KBRA policies, methodologies, rating scales and disclosures are available at www.kbra.com.

About KBRA

Kroll Bond Rating Agency, LLC (KBRA) is a full-service credit rating agency registered with the U.S. Securities and Exchange Commission as an NRSRO. Kroll Bond Rating Agency Europe Limited is registered as a CRA with the European Securities and Markets Authority. Kroll Bond Rating Agency UK Limited is registered as a CRA with the UK Financial Conduct Authority. In addition, KBRA is designated as a designated rating organization by the Ontario Securities Commission for issuers of asset-backed securities to file a short form prospectus or shelf prospectus. KBRA is also recognized by the National Association of Insurance Commissioners as a Credit Rating Provider.

Doc ID: 1002818

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