NEW YORK–(BUSINESS WIRE)–Kroll Bond Rating Agency (KBRA) releases research on the decision by some states to issue deficit funding bonds as a result of COVID-19 impacts.
COVID-19 has dramatically reduced state revenues. Shelter-in-place orders have led to significant curtailment of many activities that generate state revenues such as sales, income, and motor fuel taxes. Many states even deferred income tax collections to lessen the hardships faced by the public. But the resulting estimated state revenue losses have been profound, totaling $290 billion in aggregate for fiscal year 2021. In response, many states are considering deficit borrowing to plug the gap and to finance current spending.
States typically issue debt to finance infrastructure and other capital needs rather than operating expenditures. In this report, KBRA discusses the credit implications of borrowing to fund operations as well as provides, as illustration, New Jersey’s recently passed legislation which authorizes up to $9.9 billion of deficit financing.
Click here to view the report.
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KBRA is a full-service credit rating agency registered with the U.S. Securities and Exchange Commission as an NRSRO. 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 and is a certified Credit Rating Agency (CRA) with the European Securities and Markets Authority (ESMA). Kroll Bond Rating Agency Europe is registered with ESMA as a CRA. Kroll Bond Rating Agency Europe is located at 6-8 College Green, Dublin 2, Ireland.
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