10/09/2009
S&P Rating Services Upgrades Louisiana Bond Rating
BATON ROUGE, La. - A day after Fitch Ratings upgraded
Louisiana's bond rating, Standard & Poor's Ratings Services, or
S&P, assigned a "AA-" rating and stable outlook to the state's
general obligation, or G.O., bonds, and upgraded the long-term
rating on Louisiana's outstanding G.O. debt from "A+" to "AA-." At
the same time, S&P raised its rating to "A+" from "A" on the
state's appropriation-backed debt.
Also, Moody's Investors Services raised the outlook on
Louisiana's credit from "stable" to "positive."
Gov. Bobby Jindal said, "Today's news is yet another sign that
our efforts to improve Louisiana's economy are working and the
business world is taking note. We're going to aggressively continue
pushing for policies that are fiscally responsible, and good for
taxpayers and businesses. This upgrade will provide us with more
momentum as we work to ensure that all of our sons and daughters
can pursue their dreams right here in Louisiana."
Commissioner of Administration Angele Davis said, "Through its
actions, Louisiana has sent a strong message about our improving
business climate and economic success, and the upgrades this week
show that the financial community is listening. These affirmations
are also an example of how the state's fiscal responsibility has
tangible benefits to the tune of several million dollars in
taxpayer savings."
State Treasurer John Kennedy said, "The national credit rating
agencies have taken note of Louisiana's fiscal discipline and
economic progress in recent years. For Louisianians, the credit
upgrade will mean more taxpayer savings, increased economic
development, and more jobs."
In September, Commissioner of Administration Angele Davis
organized presentations to the three national credit rating
agencies by state leaders regarding Louisiana's current and future
financial position.
According to the S&P announcement, "The raised ratings
reflect the state's continued strong management, which has led to
its improved financial performance and position through
institutionalized changes. These changes include the state's
commitment to streamlining its government functions, as well as
adopting budget management policies that allow the timely adoption
of expenditure reduction measures, resulting in the preservation of
a significant level of cash reserves despite the challenging
economic environment."
S&P further noted that "Louisiana has demonstrated the
ability to maintain fiscal discipline by holding the line on
recurring spending and increasing its reserve and trust fund
balances during the past three years of very strong revenue
performances" and that the state's economy "continues to perform
better than the nation, and significantly better than most other
large states in the country."
Last year, Moody's upgraded Louisiana's underlying general
obligation bond rating from "A2" to "A1" with a stable outlook.
Today, Moody's raised the state's outlook "to positive from stable,
reflecting the state's strong financial position and healthy
liquidity in recent years." This outlook change affects the state's
general obligation debt as well as the state's appropriation-backed
securities.
Since the beginning of the national recession, Moody's has
raised the bond rating of only one state, which was for Louisiana
last year, and it has raised only two state rating outlooks to
"positive": West Virginia and now Louisiana. During the same
period, Moody's has downgraded five state ratings and assigned 11
negative rating outlooks to states.
Yesterday, Fitch Ratings assigned an "AA-" rating to State of
Louisiana general obligation (G.O.) bonds, and upgraded
approximately $2.5 billion in outstanding G.O. debt to 'AA-' from
"A+", with a rating outlook of "stable." The upgrade marked the
second straight year of a Louisiana upgrade from Fitch, and the
first time that Louisiana's G.O. bonds have been rated by Fitch
above the single "A" range since Fitch began rating Louisiana in
1997.
