April 9 (Bloomberg News) -- Investors such as BlackRock Inc. and Wasmer Schroeder & Co. are growing wary of New Jersey debt, saying the state’s credit rating is poised to fall further without steps to address revenue and pension gaps.

While declining bond issuance has reduced the extra yield on New Jersey debt to a three-month low, the level doesn’t compensate investors for a possible rating cut, according to Peter Hayes, head of municipal debt at BlackRock. Yield spreads may balloon if financial challenges garner headlines, as happened during fiscal crises in California and Illinois, said Justin Land, who helps manage $3.5 billion of munis at Wasmer Schroeder in Naples, Florida.

New Jersey is rated three steps below benchmark debt, with a negative outlook. A one-step downgrade would place it with California and Illinois in the single-A category, below the 47 other states. Economic growth trails its neighbors, and revenue has missed Governor Chris Christie’s goals for three straight years. His fiscal 2015 budget plan includes a record $2.25 billion pension payment that crowds out other spending.