S&P Global: Pennsylvania’s $1.17B ‘GO Refunding Bonds’ series A&B of 2025 assigned ‘A+’ rating

S&P Global Ratings today took the rating actions listed above.

Governance factors are a moderately negative consideration in our credit rating analysis for Pennsylvania. The commonwealth has a history of acrimonious budget negotiations that have resulted in budget impasses under multiple administrations and legislatures. We note that these impasses had temporarily affected the commonwealth's liquidity by creating internal borrowing problems leading to short-term delays in some payments (excluding debt service). However, we believe that despite budget impasses, Pennsylvania maintains substantial legal ability to adjust revenue, expenditures, and disbursements. Furthermore, we believe it has sufficient access to external liquidity, if needed. In our view, physical risks and social factors do not have a material influence on our credit rating analysis for Pennsylvania.

The positive outlook on all long-term ratings reflects our view of a one-in-three chance that we could raise the rating if the state continues to improve the overall fiscal condition and addresses out-year structural imbalances with an emphasis on sustainable solutions commensurate with the rating. In addition, we expect Pennsylvania's fiscal 2026 budget actions will reflect the changed federal-state relationship in a way that algins resources to spending.

We could lower our rating on Pennsylvania if we came to believe that the commonwealth's use of one-time money for ongoing expenditures would exacerbate long-term structural imbalance to a degree no longer commensurate with the rating. Furthermore, we could lower the rating if the resolution of the education funding litigation required significant new spending and the commonwealth were unable to identify or agree on recurring funding sources in a timely manner.

We could raise our rating if we come to believe that the state has demonstrated a commitment to maintaining substantial reserves and made further progress toward achieving sustainable structural balance, coupled with the moderation of significant unfunded retirement liabilities

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