Martin Z. Braun, Bloomberg Published 9:32 am PDT, Tuesday, October 2, 2018 Nine law firms were hired by Connecticut and underwriter Bank of America to vet the state’s $492 million bond sale in June. But none appear to have caught what could be a costly mistake: The contract effectively promises that Connecticut will stick to a strict $1.9 billion annual limit on a key type of debt sale, even though that cap was loosened by the state legislature. That misstep, which stemmed from confusion in Treasurer Denise Nappier’s office about when the legislature’s step took effect, threatens to force the government to choose between saving money by refinancing debt or conserving its ability to fund public works with bonds backed by its general pledge to repay. It could also leave Connecticut facing a cash crunch if the economy lapses into a severe recession by curtailing its ability to sell short-term debt to cover temporary budget shortfalls. “They’re going to have to watch their cash very carefully,” said Marcia Van Wagner, a Moody’s Investors Service analyst. “If there’s a bad downturn or something happens where they need to draw liquidity, that becomes a real constraint.” Connecticut is among the most financially strained… Read full this story
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