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Moody’s Investors Service has downgraded Pennsylvania’s general obligation debt to Aa2 from Aa1 over concerns about the state’s growing pension liabilities and sluggish economic recovery, Reuters reports this afternoon.
The cut comes before a scheduled July 24 sale of $363.6 million in general obligation refunding bonds, which Moody’s rated Aa2 on Monday, Reuters reported. Related bonds were also downgraded, Moody’s told the news service. It was not immediately clear how much total debt was affected.
Moody’s analysts said in a statement that the rating action was based on Pennsylvania’s weakened financial position, and on “the expectation that large and growing pension liabilities and moderate economic growth will challenge the return to structural balance, contributing to a protracted financial recovery,” Reuters reported.