Pennsylvania Rating at Risk as Pensions Go Untamed: Muni Credit

Pennsylvania legislators broke for the summer without addressing pension costs that will rise by 38 percent to $65 billion in 2018. They may return to find a cut to the state’s credit rating.

Standard & Poor’s will decide in the next few months whether to lower Pennsylvania’s AA rating, the third-highest level of investment grade, based on its handling of finances and pensions, analyst John Sugden in New York said in a telephone interview. Fitch Ratings is considering a similar move, with a cut “certainly more likely than not,” said Eric Kim, a director at the company, which also grades Pennsylvania AA with a negative outlook.