Bond Rating News: Woon, Pawt, NJ; And Is NJ's Pension Liability Too Far Gone?

The one bit of good news first - from :

Moody's has downgraded (by a lot, it appears to this amateur) Pawtucket's bond rating. While budget issues, including a loss of state aid (is that, in turn, the stimulus money that the state will stop receiving from the federal gov next year?) are cited, it's not clear to what extent Moody's revised rating method - the one that ominously takes into consideration unfunded pension liability - led to this downgrade.

Standard & Poor's definitively cited unfunded pensions as a factor in their downgrade this week of New Jersey's paper. In fact, the Reuters article cites an interesting fact in this regard.

Christie last year cut a huge deficit without raising taxes. But fiscal monitors have faulted him for skipping billions of dollars in contributions to the state pension fund. New Jersey has a $31 billion unfunded pension liability, according to Moody's Investors Service.