Moody’s and S&P Raise Rating Outlook on State GO Bonds

BATON ROUGE, LA – Standard and Poor’s and Moody’s have raised the rating outlook on the state’s general obligation bonds from “negative” to “stable,” according to State Treasurer John Kennedy.  Fitch revised its rating outlook on state bonds to “stable” earlier this month.

“This will be an important contributing factor to the success of our $500 million general obligation bond sale next month,” said Treasurer Kennedy. “This is also great news for the future prospects of raising our bond rating. The state has been working hard to fully recover financially from Hurricanes Katrina and Rita, and the rating agencies are taking notice.”
Moody’s said the outlook reflected “the state’s steady recovery following the hurricanes, healthy revenues, and the expectation that federal aid, a moderating economy, and healthy finances will continue in the state.”

S&P said the improved outlook reflected “Louisiana’s satisfactory revenue and budget performance over the past year, which is expected to continue during the current period of rebuilding in the Gulf region.”

S&P also gave a Debt Derivative Profile score of 1.5 to two swap agreements the state entered into for the sale of Gulf Tax Credit Bonds. This is the second highest score for these types of transactions and indicates a low credit risk. “The score also suggests that S&P is comfortable with the formal swap policy the state adopted,” said Treasurer Kennedy.

All three rating agencies have now raised their respective rating outlooks to “stable” and affirmed their ratings on state general obligation bonds. Fitch and S&P affirmed the state’s “A” rating, and Moody’s affirmed its “A2” rating.

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