Debt Ceiling Debate Threatens Maryland’s Credit Rating

The implications of the federal debt ceiling debate continue to unfold as one of the nation’s leading bond rating agencies threatened to downgrade Maryland’s credit rating.  Moody’s Investors Service announced on Tuesday that it would be reviewing the ratings of Maryland, along with New Mexico, South Carolina, Tennessee, and Virginia for a possible downgrade.  According to Moody’s these states were selected due to their fiscal relationship with the U.S. sovereign credit.   The Bond Buyer reports:

Maryland, which had its triple-A rating affirmed by Moody’s on July 14, was put on the list for the high concentration of federal government workers and contractors in its tax base.

The impact on Maryland is more immediate: it has a $100 million general obligation retail order period scheduled for Friday, plus a competitive deal for $390 million and a $206 million debt refunding, both scheduled for next Wednesday.

“In terms of the broader situation, nothing has changed between last week and this week,” said Maryland Treasurer Nancy Kopp, referring to the Moody’s action.

Maryland does not borrow for cash-flow purposes, and Kopp said the new-money deal — 50% of which is going to Maryland public schools — could be postponed with no detrimental effects save that projects could be delayed.

“Those are public schools that might not be built because of this totally unsettled situation in Washington,” Kopp said Tuesday.

“If things look steady for us and for our taxpayers then we will go forward with the deal,” she added. “If the folks in Washington cast such a pall upon things that people become very nervous and decide they don’t want to invest, then we’ll hold back.”

Click here to read The Baltimore Sun’s coverage of this unfolding story.

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