ANNAPOLIS — Maryland State Treasurer Nancy K. Kopp has announced that the three major bond rating agencies have reaffirmed the State’s AAA bond rating, all with stable outlooks, in advance of the upcoming competitive sale of State General Obligation Bonds on Wednesday, August 14, 2019.
Maryland is one of thirteen states to hold the coveted AAA rating, 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 the bonds a rating of Aaa since 1973, and Fitch Ratings has rated the bonds AAA since 1993.
“We are pleased that Maryland continues to be recognized as a triple-AAA State, a distinction that reflects Maryland’s fiscal strength and longstanding commitment to prudent, proactive financial management,” Treasurer Kopp said. “The rating agencies recognize that Maryland’s dynamic economy, highly educated workforce, and above-average wealth and income levels make it an outstanding investment.”
“The lower interest rates that the State will achieve on its bonds due to its outstanding credit rating will save Maryland residents millions of dollars and allow those dollars to be directed to investment in our local communities, notably our schools, libraries, institutions of higher education, healthcare facilities and cultural projects important to the residents of our State,” Kopp added.
Fitch Ratings, in assigning its AAA rating and stable outlook, said that Maryland’s rating “reflects its broad, diverse and wealthy economy,” as well as extensive budget controls, sound financial operations and strong management of debt.
“Fiscal management is very strong, with consensus-oriented long-term planning and multiple sources of flexibility including a consistently solid budgetary reserve and a demonstrated ability to adjust spending to address changing circumstances. Although liabilities are elevated for a state, they are moderate relative to resources and carefully managed,” the ratings firm said.
“The highest-quality rating reflects Maryland’s strong financial management policies, ample liquidity levels, stable economy and high personal income levels, all of which offset the state’s economic exposure to constrained federal spending, as well as the above-average debt and pension burdens stemming from the state’s practice of issuing debt and absorbing certain pension costs on behalf of local governments,” Moody’s Investors Service said of its rationale.
In assigning its AAA long-term rating and stable outlook, S&P Global Ratings said: “Our ‘AAA’ long-term rating on Maryland’s GO bonds reflects our view of the State’s: Broad and diverse economy, which continues to post slow growth; Strong wealth and income levels relative to those of the nation; Long history of proactive financial and budget management, including implementation of frequent and timely budget adjustments to align revenues and expenditures and long-term financial planning that should continue to be helpful in addressing future budget challenges; and Well-developed debt management practices with a moderate debt burden for most measures and rapid amortization, although long-term pension and other postemployment benefits liabilities remain moderately high, in our opinion.”
The bond sale will include $500,000,000 of tax-exempt bonds and $50,000,000 in taxable bonds. The tax-exempt bonds will be sold in two bidding groups to enhance competition: Bidding Group 1 — $248,700,000 of tax-exempt bonds; and Bidding Group 2 — $251,300,000 of tax-exempt bonds. Both bidding groups are expected to be sold to institutions.
As is always the case with Maryland’s tax-exempt General Obligation Bonds, the State will use the proceeds to finance important capital projects and improvements, such as public schools, community colleges, university projects and hospitals. The Maryland State Treasurer’s Office expects to conduct another bond sale in early 2020.
The other 12 states with AAA ratings from all three rating agencies are Delaware, Georgia, Florida, Indiana, Iowa, Missouri, North Carolina, South Dakota, Tennessee, Texas, Utah, and Virginia.