News > Press Releases
Oct 08, 2009
BATON ROUGE – For the second straight year, Fitch Ratings has upgraded Louisiana’s bond rating and maintained a “stable” rating outlook for the state.
Today, Fitch Ratings assigned an “AA-“ rating to State of Louisiana general obligation (G.O.) bonds, and upgraded approximately $2.5 billion in outstanding G.O. debt to ‘AA-‘ from “A+”, with a rating outlook of “stable.” Rating upgrades, like higher credit scores, typically mean better borrowing terms that can save the state millions of dollars in interest costs.
The upgrade marks the first time that Louisiana’s G.O. bonds have received a rating from Fitch above the single “A” range since Fitch began rating Louisiana in 1997. Last year, Fitch assigned an underlying rating of “A+” to Louisiana G.O. bonds, and upgraded the state’s outstanding G.O. debt to “A+” from “A.” To date, the upgrade for Louisiana is also the only upgrade of the bond rating of any state by Fitch this year. This is the first time that the state has been in the double “A” category since the mid-1980’s.
In its announcement, Fitch said the “upgrade to 'AA-' from 'A+' reflects the strong financial management demonstrated by the state in recent years.” Fitch’s report cites recent actions of the state to maintain a balanced budget and sizable reserves like the rainy day fund. Fitch also “recognized the state’s record of conservative revenue estimating in recent years and believes that the state’s reserve position and focus on spending control support its ability to deal with future shortfalls.”
In addition, Fitch cited Louisiana’s creation of a streamlining commission and dedicated funding review among steps state government is taking to help address future general fund budget challenges, as well as noting the relative strength of Louisiana economic indicators like employment and job creation compared to the national economy and other states.
According to the Fitch release, Louisiana “has had some recent success with economic development efforts that support diversification.”
Governor Bobby Jindal said, “The upgrade sends a message that Louisiana’s business climate continues to improve and we’ve established an economic environment that is creating opportunity for our people. While we’ve made incredible progress through dozens of economic development wins, our work is not done yet. Today’s bond rating upgrade will enable us to continue our strong economic momentum as well as attract and retain businesses so we can create even more jobs for our people.”
Commissioner of Administration Angele Davis said, “This upgrade is rather remarkable given the current condition of the national economy, but it just shows that Louisiana is moving in the right direction in terms of prudent financial management, fiscal reform, and strong economic progress compared to other states.”
State Treasurer John Kennedy said, “For the second straight year, a national credit rating agency has taken note of Louisiana's fiscal discipline and economic progress in recent years. For Louisianans, the credit upgrade will mean more taxpayer savings, increased economic development, and more jobs.”