Skip to content
Subscriber Only

Pennsylvania Has Worst Spread Since ’10 on Pensions: Muni Credit

Municipal-bond investors are demanding the biggest yield penalty since 2010 on Pennsylvania issuers as the state’s budget chief warns that a growing pension deficit threatens the commonwealth’s credit rating.

Republican Governor Tom Corbett wants to create a defined-contribution plan for new public employees and trim future benefits for current workers. He is trying to shrink an unfunded pension liability that is set to rise 38 percent by 2018 to $65 billion. Ratings companies may cut Pennsylvania’s credit grade if lawmakers don’t pass the overhaul before the fiscal year begins July 1, said Charles Zogby, state budget secretary.