Maryland retained AAA ratings from all three of its current rating agencies on a new $600 million bond sale, but S&P Global Ratings kept its Negative Outlook as the State faces mounting budget and federal pressures.
Fitch Ratings and KBRA each assigned AAA ratings to Maryland’s $600 million State and Local Facilities Loan of 2026, Second Series bonds and maintained Stable Outlooks. S&P Global Ratings also assigned a AAA rating to the bonds but maintained the Negative Outlook it placed on Maryland earlier this year.
Maryland changed its rating agency lineup this spring, ending its longtime relationship with Moody’s after the agency downgraded Maryland from AAA to Aa1 in 2025. KBRA now joins Fitch and S&P in rating Maryland’s general obligation bonds.
The latest ratings preserve Maryland’s top-tier standing and help keep borrowing costs low. GO bonds finance capital projects across Maryland, including school construction and other infrastructure.
Fitch pointed to Maryland’s fiscal management and well-funded reserves as significant strengths. But the agency again warned of rising spending demands, particularly for education and Medicaid, and said the rating could come under pressure if recurring revenues fail to keep pace.
Fitch also continues to flag Maryland’s pension obligations. The agency considers the State’s debt and net pension liabilities elevated compared with other states, though still manageable relative to Maryland’s economic base.
KBRA focused more heavily on federal uncertainty. The agency noted Maryland’s greater reliance on federal employment than any other state and warned that reductions in the federal workforce and contracts could weigh on the economy and State revenues.
KBRA also cited new costs stemming from federal changes to Medicaid cost sharing and SNAP administration. The agency said the full fiscal impact remains uncertain.
S&P remains the only one of Maryland’s current rating agencies with a Negative Outlook. As previously covered on Conduit Street, the agency lowered Maryland’s outlook in May over concerns about structural budget balance and whether ongoing revenues can keep pace with spending.
That concern tracks with Maryland’s broader fiscal outlook. DLS projects widening structural deficits in the years ahead as ongoing spending continues to outpace revenues, with growing education costs adding pressure beginning in fiscal 2028.
Stay tuned to Conduit Street for more information.
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