Hernando J. Montero
Director of Credit Analysis
Stoever Glass & Co., Inc.
Phone: (212) 952-1910
On May 10, 2017, Hartford, Connecticut, took a step toward bankruptcy by soliciting proposals from law firms that specialize in municipal restructuring and Chapter 9 bankruptcy, which protect financially strapped municipalities, according to the Hartford Courant. The article reported Hartford was reviewing various firms and could hire one as soon as this week, said people close to the matter. Mayor Luke Bronin had hinted for months that the city could file for bankruptcy, given the uncertainty of the state budget process and the depth of the state budget crisis, and during his budget release in April said that he was “not in a position to rule anything out”.
Hartford’s position as the state capital and regional economic and employment center is a positive credit factor; however, those strengths are offset by depressed wealth and income levels, and high tax payor concentration. The city’s faces significant challenges, including achieving structurally balanced operations, closing the current year budget gap and subsequent year projected shortfalls. Hartford has limited operating flexibility, exacerbated by weak and declining reserves and increasing costs (including debt service and pension payments) projected over the next several years.
Hartford faces a $65 million deficit next year and a $14 million shortfall this year. Although proposed cuts and concessions from the unions reduce deficits, the city is still seeking $40 million in additional state aid to close next year's budget gap. The city has resorted to short-term borrowing to cover costs such as payroll payments this year. City official’s options for addressing the growing budget deficits and eliminating the structural imbalance are limited by property tax revenue constrained by already high tax rates and prospects for additional state aid limited by the state’s own fiscal challenges.
Mayor Bronin has stressed that the state must be a partner in pulling Hartford from the brink of financial ruin. Governor Malloy’s initial budget included additional funding for its local municipalities; however a recently proposed executive budget cut state aid by $1.4 billion from the fiscal 2018 budget. It is unclear whether there is support in the General Assembly for bailing out Hartford. The city has $550 million of total debt outstanding.
About the Author:
Hernando J. Montero, Stoever Glass & Co., Inc.
Director of Credit Analysis
Hernando J. Montero is Director of Credit Analysis at Stoever Glass & Co., Inc. Mr. Montero has a background as a municipal research analyst and consultant providing fundamental credit analysis to various buy/sell side firms. He was previously associated with Samuel A. Ramirez & Co., initially as an Associate and later as Vice-President of the Municipal Credit Strategy group, where he supported the sales and trading efforts of institutional and retail desks. In addition, Hernando was the interim head of the Municipal Credit Strategy group and was responsible for overseeing the municipal credit risk needs of Ramirez & Co. for primary market, secondary market, underwriting, and regulatory/compliance purposes, and covered all sectors of the municipal market traded by the organization.
Mr. Montero began his career at UBS Asset Management of Puerto Rico as a Portfolio Analyst, where he served as the primary analyst of nine close-end fixed-income funds with nearly $2 billion in shareholder assets. He received his B.B.A. in Finance, Magna Cum Laude, from Universidad del Sagrado Corazón. Hernando holds his General Securities (Series 7) license.
“We are pleased to welcome Hernando to the Stoever Glass family, and look forward to offering his insights and analytical expertise to our clients,” said Roland Stoever of Stoever Glass & Co. “His background in fixed income and municipal instruments is a solid fit for our organization.”
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