Barron’s published a study by mutual fund manager Eaton Vance that ranked the states by creditworthiness (in other words how risky it is to lend money to NJ) and New Jersey was 49th out of 50 states, trailing only broke Illinois.  This is no surprise, given that NJ also has the second-lowest bond rating of any state.

Eaton Vance provided two measures of creditworthiness, debt (including unfunded pension liabilities) to state GDP and the unemployment rate.  NJ was 49th in debt-to-GDP at 31% (behind only CT at 33%) and 49th in unemployment rate at 16.6% (behind only MA at 17.4%).  All of this goes to confirm just how bad NJ’s fiscal condition and economy were even before COVID.

More importantly, this study looks at NJ as a municipal bond borrower would.  This is important because, just as Gov. Murphy wants to borrow $4 billion in bonds to plug FY2021 budget gaps, NJ will continue to need access to the municipal bond market.   If municipal bond investors see NJ as a bad credit risk, they might charge higher interest rates or even choose not to lend to NJ.  And yet the governor continues to dig NJ’s debt hole even deeper.