Moody’s upgrades New Jersey credit rating to Aa3, citing strong reserves and pension funding
TRENTON, N.J. — Moody’s Investors Service has upgraded New Jersey’s general obligation bond rating to Aa3 from A1, revising the state’s outlook from positive to stable. The credit rating agency cited the state’s strong financial reserves, growing tax revenue, and the Murphy administration’s commitment to fully funding the pension system.
This marks the state’s ninth credit rating upgrade since Gov. Phil Murphy took office.
“The upgrade was driven by the state’s ability to maintain a comparatively robust budgetary surplus through the current fiscal year even while providing full actuarial pension contributions and meeting education aid and other spending commitments,” Moody’s wrote in its analysis announcing the upgrade.
“Today’s announcement by Moody’s demonstrates our commitment to reversing decades of fiscal mismanagement,” said Governor Phil Murphy. “We have made difficult decisions that prioritized a strong, reliable surplus and delivered five consecutive full pension payments. While there is more work to be done in the future, these tough decisions have put us on a long-term path to financial stability.”
“As we approach the final months of Governor Murphy’s administration, it is extremely gratifying to receive yet another vote of confidence from industry giant Moody’s that our tireless efforts over the years – including making our pension payments, building our surplus, and reducing our bonded debt – have helped to significantly strengthen and improve our State’s fiscal health – a core mission of this administration,” said State Treasurer Elizabeth Maher Muoio. “With this ninth credit rating upgrade in just over three years, we have further reversed the trajectory of the previous decades of downgrades, and again have independent confirmation that we are leaving the State better positioned to meet its financial obligations and future challenges.”
Moody’s last upgraded New Jersey’s rating in April 2023, moving it from A2 to A1. In its latest analysis, the agency also cited debt defeasance and the state’s surplus as factors that will allow New Jersey to continue its pension funding practices.
The report noted New Jersey’s high education level and strong recent economic performance compared with regional peers as additional support for fiscal stability during a period of change at the federal level.
This is the Murphy administration’s second upgrade this year. In August, S&P Global Ratings raised New Jersey’s rating from A to A+. Prior to Murphy’s tenure, the state had endured 11 consecutive credit rating downgrades.
