Bangkok--10 Mar--Standard & Poor's
Standard & Poor's Ratings Services said today it raised its long-term rating and underlying rating (SPUR) to 'AA+' from 'AA' on the state of Oregon's general obligation (GO) bonds. Standard & Poor's also raised its long-term rating and SPUR to 'AA' from 'AA-' on the state's appropriation obligations. The outlook on all ratings is stable.
In addition, Standard & Poor's assigned its 'AA+' long-term rating and stable outlook to the state's $20.4 million series 2011A tax-exempt alternate energy project bonds and $23 million series 2011B alternative minimum tax alternate energy project bonds.
"The upgrades reflect our view that the state has demonstrated a willingness to make revenue and expenditure adjustments to correct structural imbalances during the current low stage of the revenue cycle," said Standard & Poor's credit analyst Chris Morgan. Despite successive downward revenue forecasts, the state projects that mid-biennium budgetary revisions will allow it to hold combined available reserves on a budgetary basis at the end of fiscal 2011 at a level virtually equal to that at the end of fiscal 2009. We note that, absent modifications as part of the upcoming biennial budget, the state's "rainy day" fund and education stability fund would likely grow under current constitutional and statutory mechanisms.
The ratings also reflect our view of the state's:
Strong financial policies and practices, including institutionalized quarterly reviews of financial performance and economic forecasts that guide budget assumptions; and
Above-average pension funding ratio on a mark-to-market basis and our assessment that the state's other postemployment benefits represents a low risk.
Partially offsetting these strengths, in our view, are:
A reliance on personal and corporate income tax revenues, which fluctuate with economic cycles; andActive citizen initiative process, which can restrict budgetary flexibility.
The series 2011A and 2011B bonds are secured by the full faith and credit of the state, including the state's obligation to use legally available resources and, if necessary, a tax on property within the state without limitation as to rate or amount to pay the bonds. We understand that the state will use the proceeds of each series to fund grants for energy improvement, conservation, and renewable energy projects.
RELATED CRITERIA AND RESEARCH
USPF Criteria: State Ratings Methodology, Jan. 3, 2011
USPF Criteria: Appropriation-Backed Obligations, June 13, 2007
Complete ratings information is available to subscribers of RatingsDirect on the Global Credit Portal at www.globalcreditportal.com. All ratings affected by this rating action can be found on Standard & Poor's public Web site at www.standardandpoors.com. Use the Ratings search box located in the left column.
Media Contact:
Ana Sandoval, New York (1) 212-438-5095,
[email protected]
Analyst Contacts:
Chris Morgan, San Francisco (1) 415-371-5032
Gabriel Petek, CFA, San Francisco (1) 415-371-5042