Bangkok--10 Sep--Standard & Poor's
Standard & Poor's Ratings Services assigned its 'AAA' long-term rating to the State of Utah's general obligation (GO) bonds series 2009C and D. In addition, Standard & Poor's affirmed its 'AAA' long-term rating on Utah's outstanding GO bonds. The outlook is stable.
"The rating reflects our view of Utah's young, well-educated work force and diverse economy, and an unemployment rate that, though rising, remains lower than the national average; continued good financial management, including proactive budget adjustments to maintain good financial reserves; and a low debt burden with short maturity schedules, a well-funded retirement system, and limited other post-employment benefits liabilities," said Standard & Poor's credit analyst Misty Newland.
Bond proceeds will fund a portion of the state's substantial transportation capital program.
We consider Utah's management practices "good" under our Financial Management Assessment (FMA) methodology. An FMA of "good" indicates that practices exist in most areas, although not all may be formalized or regularly monitored by governance officials.
The stable outlook reflects our view that the state's budget adjustments in response to the recent revenue contraction ensure maintenance of good reserve levels. Also, we believe that Utah's active management of recent structural budget challenges and current reserve levels somewhat mitigates the uncertainty of the current economic environment, which could present further downward pressure on revenues. Additionally, if the economy, and thus revenues, do not rebound sufficiently to offset the loss of stimulus funds, we expect (given the state's use of one-time stimulus funding to soften its budget reductions) that the state would continue to make budget adjustments that maintain the flexibility that has contributed to the current rating and that is consistent with the financial policies and practices that have driven the "good" FMA assessment.
RELATED RESEARCH
USPF Criteria: "GO Debt," Oct. 12, 2006
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Media Contact:
Ana Sandoval, New York (1) 212-438-5095, [email protected]
Analyst Contacts:
Misty Newland, San Francisco (1) 415-371-5073
David G Hitchcock, New York (1) 212-438-2022