By Keith M. Phaneuf
When measured against its sluggish economy, Connecticut’s huge bonded and pension debt ranks worst among all states, a leading Wall Street publication asserted this week.
But while Barron’s, a financial weekly published by Dow Jones & Co., wrote that growing debt in most states is changing how some investors look at the municipal bonds, it also concluded that Connecticut’s fiscal problems aren’t heavily reflected in the market.
Municipal bonds are popular in many companies’ portfolios because they often are exempt from federal and state income taxes. But because municipal finances are so dependent on state budget decisions, market analysts look closely at the fiscal health of states when deciding which municipal bonds to recommend for investment.
“It shows a legitimate cause for concern,” economist Don Klepper-Smith of Datacore Partners in New Haven said of the article, “State of the States.” “It shows there’s considerably more risk (in municipal bonds) than is currently believed, certainly more than many people are aware of.”
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