Moody's Investors Service held a conference call with chief elected officials in the area on Monday to discuss the rating agency's decision to attach a credit rating outlook of negative to many wealthy Fairfield County towns, officials said.
The change affects mostly Fairfield County towns in Connecticut with a "AAA" rating, or the highest possible credit rating possible. Towns in Hartford County, with the high credit rating, such as Avon, will be unaffected, according to officials. Other municipalities affected by the negative outlook are in New Haven County.
Newtown, which has a credit rating one notch below that, "AA+," also will be unaffected, though officials will have to be mindful of a similar future action, First Selectman Pat Llodra told the Board of Finance Monday.
Llodra said she accepted an offer to listen in on the Moody's conference call in order to be apprised of the situation.
"Our purpose of listening in was to listen and learn," she said.
The state has 15 communities with the "AAA" rating, many of them in Fairfield County, Llodra said. They were all surprised to learn Moody's was attaching a negative outlook to their communities' credit rating, which was one of the reasons the conference call was organized, she said.
"All received a letter last week from Moody's that they will be put on negative watch," Llodra said of the affected Fairfield County towns.
The possible future downgrade had chief elected officials from those towns questioning Moody's reasoning, according to a .
"The overall tone of the discussion was that Moody's jumped the gun with some very poor research," Darien First Selectman Dave Campbell said Monday in his report to that town's Board of Selectmen.
The process Moody's used to identify towns for review was flawed, according to Campbell, who cited Darien's stable tax base, high collection rate, and highest-in-the-state fund balance of 15 percent.
"Everything they look for, we have," Campbell said
The service also lumped Darien into the Bridgeport market when studying unemployment rates, Campbell said, producing a weaker fiscal outlook than the town deserves.
The negative outlook means each affected town's credit rating could fall victim to a possible downgrade in the future pending review by Moody's.
"The bottom line is that it's going to take a long time to figure out what's going to happen to all the municipalities," Campbell said. "When they get a plan, I guess we'll hear about it."
Unlike Standard & Poor, which downgraded the U.S. government's credit rating to "AA+," Moody's left the country's "AAA" rating intact, though it has changed the outlook to negative.
That revision led the rating agency to alter its outlook for municipalities it believes will be affected by the likely change in federal spending, macroeconomics, market risk and volatility and status of reserves, Llodra said.
"They didn’t feel that the municipalities in Fairfield County were warranted having their credit rating higher than the federal government," she said.
At the same time, officials could not get a clear answer regarding why towns in Hartford County with a "AAA" rating weren't affected.
"That question kept getting asked," Llodra said, adding that the chief elected officials were left to "guess" that it may be due to Fairfield County's connection to financial markets in New York City.
Editor's note: The change to a negative outlook affects mostly Fairfield County towns with a "AAA" credit rating, though some towns in New Haven County will be affected. This article has been updated from an earlier version to reflect this additional information.