Bangkok--2 Jun--Standard & Poor's
Standard & Poor's Ratings Services assigned its 'AAA' rating to Utah's $634.8 million GO bonds series 2011A. In addition, we affirmed our 'AAA' long-term rating on Utah's general obligation (GO) bonds outstanding, as well as our 'AA+' long-term rating and underlying rating (SPUR) on the state's lease revenue bonds outstanding. The outlook on all ratings is stable.
The ratings reflect our view of Utah's:
- Strong governmental framework with a constitutional requirement to maintain a balanced budget and a fiscal policy that allows for changes to the revenue structure and program spending by a simple majority of the legislature;
- Young, well-educated work force, diverse economy, and an unemployment rate that, although at historic highs, remains lower than the national average;
- Continued good financial management, including proactive budget adjustments to maintain adequate "rainy day" reserves; and
- Moderate debt burden and limited other post-employment benefit (OPEB) liabilities.
"According to several important economic measures, Utah's experience through the 'Great Recession' has lagged and been less severe than the experience observed in some other states," said Standard & Poor's credit analyst Gabriel Petek. "Adding to the stability of the state's credit is that its revenues are once again in a growth mode and the state has already accommodated the loss of federal stimulus funding in its programmatic service levels," added Mr. Petek.
The GO bonds are secured by a pledge of Utah's full faith, credit, and resources and an unlimited ad valorem property tax that may be levied on all property subject to state taxation for payment of the bonds. The lease revenue bonds are secured by payments made by the state for the use of various leased assets. The rating on the lease revenue bonds is one notch lower than the GO rating to reflect our opinion of the appropriation risk associated with appropriation-backed obligations.
RELATED CRITERIA AND RESEARCH
USPF Criteria: State Ratings Methodology, Jan. 3, 2011
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:
Edward Sweeney, New York (1) 212-438-6634,
[email protected]
Analyst Contacts:
Gabriel Petek, CFA, San Francisco (1) 415-371-5042
Misty Newland, San Francisco (1) 415-371-5073