Connecticut’s cities and towns could face higher borrowing costs if Hartford moves ahead with a bankruptcy filing, an investment research firm warned this week, the Hartford Courant reported today. In a newsletter to bond holders and other investors, Municipal Market Analytics highlighted the issues that a chapter 9 petition could pose, including steeper interest rates when towns borrow for infrastructure projects, and a hit to the state’s bond rating. “Should the city of Hartford actually default or be permitted to file for chapter 9 bankruptcy, other CT cities are likely to face somewhat higher borrowing costs going forward,” the Concord, Mass., group wrote. “Larger, more stressed cities like New Haven could temporarily (for a month or so) lose access to the traditional, high grade bond market.” The state would probably also have to deal with a spike in borrowing costs, the firm said, “as investors (rightly) assume that a Hartford bankruptcy hastens the state’s ongoing economic contraction.”
