Fitch Affirms Maryland’s AAA Rating in Advance of $1.2B Bond Sale

Fitch Ratings affirmed Maryland’s AAA bond rating ahead of the upcoming competitive sale of State General Obligation (GO) Bonds. Fitch Ratings assigned a AAA rating to the following GO bonds:

  • $1 billion state and local facilities loan, first series A of 2024, tax-exempt bonds (competitive)
  • $200 million state and local facilities loan, first series B of 2024, taxable bonds (competitive)

Fitch Ratings LogoA state’s bond rating, also known as its credit rating, is important because it affects the interest rate the state pays on bonds it sells to investors. The rating also indicates a state’s ability to fulfill its future financial obligations and the likelihood of default.

Maryland is one of fourteen states with the highest possible rating from all three major bond rating agencies. S&P Global Ratings has rated the bonds AAA since 1961, Moody’s Investors Service has assigned them a rating of Aaa since 1973, and Fitch Ratings has rated them AAA since 1993.

According to the Fitch Ratings analysis:

Maryland’s ‘AAA’ IDR and GO rating reflect its broad, diverse and wealthy economy, strong and forward-looking fiscal management, and broad budgetary flexibility in spite of the challenges posed by increasing medium-term obligations. Liabilities are elevated for a state but are carefully managed and moderate relative to the economic resource base.

The state’s economy largely benefits from its proximity to the nation’s capital. However, Maryland’s exposure to changes in the federal budget, including future budget cuts, poses a greater uncertainty for Maryland than for most states given its large federal agency presence and associated private contracting.

As is always the case with Maryland’s tax-exempt General Obligation Bonds, the proceeds will finance necessary capital projects and improvements at public schools, community colleges, university projects, hospitals, and more.

The Maryland Board of Public Works, composed of Governor Wes Moore, Treasurer Dereck Davis, and Comptroller Brooke Lierman, will preside over the competitive bond sale on Wednesday, June 5, 2024.

Stay tuned to Conduit Street for more information.