Rating Agencies Confirm Maryland’s AAA Bond Rating

As the State prepares for its March 6 bond sale, the rating agencies have again confirmed Maryland’s Triple AAA bond rating.  As reported on Southern Maryland online:

Treasurer Kopp said, “While Maryland has historically received Triple AAA ratings from the three major bond rating agencies, today’s recognition of Maryland’s fiscal strength and prudent management is welcomed news. In light of the national uncertainties surrounding sequestration, we are pleased the rating analysts recognize Maryland’s strong, stable and prudent financial management.”

In prior statements, one rating agency in particular indicated that federal sequestration and the resulting reductions to the State budget could lead to a downgrade of Maryland’s Triple-AAA bond rating. However, when affirming Maryland’s rating, the agency said the following:

Moody’s, in explaining its Aaa rating and negative credit outlook said: “The highest quality rating reflects Maryland’s strong financial management policies and stable economy with high personal income levels. The rating also acknowledges the state’s above average debt burden and large unfunded pension liabilities relative to the size of its economy.”

All rating agencies noted the following in their analyses.

All three rating agencies point to the State’s history of strong, sound financial management as a strength for Maryland. In assessing Maryland’s management practices, Standard & Poor’s assigned a rating of “strong” to this factor, noting: “Based on a review of several key financial practices, Maryland has made continuing efforts to institutionalize sound financial management practices. In reviewing its practices and policies, it was very apparent to us that the state’s use of a five-year financial plan, which is updated annually with the adopted budget, provides the basis for future fiscal decisions and recognizes future fiscal year gaps. Monthly monitoring and reporting of key revenues allows the state to make midyear financial adjustments, if necessary, to maintain balance. Maryland has consistently maintained its statutory rainy-day fund at or above its legal minimum of 5% of revenues.”

During his meeting with the MACo Legislative Committee today, Governor O’Malley shared his views on the bond market, and his pleasure with the renewed rating from the agencies for the pending March 6 bond sale.