Latest news with #bondrating
Yahoo
16-05-2025
- Business
- Yahoo
Fitch reaffirms state's AAA bond rating, a day after Moody's soured on the state
The Louis L. Goldstein Treasury Building in Annapolis. (File photo by Danielle E. Gaines/Maryland Matters.) Fitch Ratings reaffirmed Maryland's AAA bond rating Thursday afternoon, just one day after Moody's rocked state leaders by downgrading its rating of the state's creditworthiness after more than 50 years. In reaffirming its highest rating, Fitch noted elevated liabilities for the state that 'are carefully managed and moderate relative to the economic resource base. The state's economy benefits from its proximity to the nation's capital, with a large federal presence and associated private contracting.' The rating firm also noted the state's 'unlimited legal authority to raise' taxes. 'Revenue growth prospects are expected to remain strong and comparable with overall U.S. economic growth over the long term. Risk from reliance on personal income tax is mitigated by a robust federal institutional presence,' Fitch analysts wrote in the analysis. But Fitch noted concerns about the state's 'rising spending demands with recurring revenues,' particularly state spending on public school education. The firm said the state's 'inability to effectively manage rising spending demands with recurring revenues'could 'weaken Fitch's assessments of either the state's expenditure framework or operating performance.' Retiree benefits may also lead to a downgrade should there be 'a material increase,' Fitch said. Fitch has given Maryland its highest credit ranking since 1993. Maryland loses coveted Aaa bond rating The Fitch rating runs counter to one released Wednesday by Moody's, considered a gold standard rating agency. Moody's downgraded its Aaa rating for Maryland to Aa1, the first downgrade since 1973. The change meant the state lost its treasured triple AAA creditworthiness rating — Standard & Poor's, the third major bond-rating firm, has given Maryland an AAA rating since 1961. But Moody's had been telegraphing its position for months. It took a dim view of the state's over-reliance on federal agencies and employment, and its lack of a diverse economy that was less susceptible to President Donald Trump's slashing of federal budgets, agencies and workforce. Last year, Moody's affirmed its triple-A rating for the state, but downgraded its outlook from stable to negative, citing concerns about spending, including public school funding. In March, the company issued another report naming Maryland the state most at risk as a result of federal budget and job cuts. Moody's had given Maryland an Aaa rating every year since 1973 — until Wednesday. Its downgrade of Maryland 'was driven by economic and financial underperformance compared to Aaa-rated states, which is expected to continue given the state's heightened vulnerability to shifting federal policies and employment, and its elevated fixed costs,' Moody's said in its report. State officials reacted angrily to the downgrade and blamed the uncertainty caused by Trump despite billions in deficits over the next five years that were projected in December and January, before Trump was sworn in. Prior to Wednesday's announcement, Maryland was one of 14 states to have the highest rating from the three major agencies — Fitch, Moody's and Standard & Poor's. Credit ratings, which are updated annually, determine how much interest the state — and its taxpayers — pay on billions of dollars borrowed for roads, bridges, schools and other infrastructure. With Fitch reaffirming its confidence in the state, it is unclear if the Moody's downgrade will affect the interest rates available to Maryland. State officials now await the Standard & Poor's report, which is expected in the coming days, ahead of a planned June 11 bond sale. State officials have expressed little concern about retaining that firm's highest ranking. SUPPORT: YOU MAKE OUR WORK POSSIBLE
The Independent
14-05-2025
- Business
- The Independent
Maryland loses triple-A bond rating from Moody's rating agency
Maryland lost its triple-A bond rating from Moody's on Wednesday, a rating the state has cited for more than 50 years as a sign of strong fiscal stewardship. Moody's downgraded the state's credit rating to Aa1. Maryland had received a triple-A bond rating from Moody's since 1973. The state has benefitted from the higher rating by paying the lowest rates when it sells bonds to pay for infrastructure, likes roads and schools. 'The downgrade was driven by economic and financial underperformance compared to Aaa-rated states, which is expected to continue given the state's heightened vulnerability to shifting federal policies and employment, and its elevated fixed costs,' Moody's said. Gov. Wes Moore and other leading Maryland Democrats blamed President Donald Trump's mass layoffs of federal workers, which is having a big impact on the region. The District of Columbia also recently received a credit-rating downgrade. 'To put it bluntly, this is a Trump downgrade," Moore said in statement made jointly by the presiding officers of the state's legislature, Comptroller Brooke Lierman and Treasurer Dereck Davis, who are all Democrats. 'Over the last one hundred days, the federal administration's decisions have wreaked havoc on the entire region, including Maryland.' Maryland Republicans described the downgrade as 'a harsh indictment of the state's current direction under Governor Wes Moore.' 'Donald Trump didn't downgrade Maryland's bond rating — Annapolis Democrats did. And now they're scrambling for someone else to blame," Republican Sen. Steve Hershey, the Senate minority leader, said in a statement. "This is the result of reckless spending, bloated budgets, and an economy that's been hollowed out by overregulation and overreliance on the federal government.' Moody 's had noted earlier this year that federal cuts pose a greater threat to Maryland than any other state. Maryland lawmakers recently concluded a challenging legislative session to balance the state's budget. They closed a $3.3 billion budget deficit for the next fiscal year with a combination of tax increases, budget cuts and fund transfers. Maryland lawmakers also directed the governor's budget office to keep track of the impact of federal cuts, alert them if it reaches $1 billion and make recommendations on how to deal with the impact. The Democrats' statement noted that Moody's acknowledged that the state had closed its budget gap, even as it remains exposed to the economic consequences of federal funding cuts and layoffs. 'Maryland still holds one of the highest possible credit ratings in the nation," the joint statement said, 'and as we have for decades, we will always pay our debts.'
