Bangkok--25 Dec--Standard & Poor's
Standard & Poor's Ratings Services lowered its issuer credit rating (ICR) on Arizona to 'AA-' from 'AA'. Standard & Poor's also lowered its underlying rating (SPUR) to 'A+' from 'AA-' on the state's outstanding certificates of participation (COPs) and lease revenue debt. Finally, Standard & Poor's assigned its 'A+' long-term rating to the state's series 2010A COPs. The outlook is negative.
"The lowered ratings are based on our opinion of the state's structurally imbalanced budgets, which are partly due to lack of sufficient budget action," said Standard & Poor's credit analyst Matthew Reining. "The rating action further reflects the state's tightening liquidity position, even given the additional outside liquidity it has received in recent months."
We understand that the series 2010A proceeds will be deposited into the state's general fund to fund fiscal 2010 appropriated expenditures.
Arizona is at a financially challenging place, in our opinion. Fundamentally, the state enjoys a broad and diverse economy supported by a growing population. However, the slowing national economy and a painful housing downturn have financially pinched the state, which had previously enjoyed above-average growth in numerous categories including population, economy, and housing value. Sales and income taxes have declined, putting pressure on budgets.
RELATED RESEARCH
USPF Criteria: "GO Debt," Oct. 12, 2006
USPF Criteria: "Appropriation-Backed Obligations," June 13, 2007
Complete ratings information is available to RatingsDirect on the Global Credit Portal subscribers at www.globalcreditportal.com and RatingsDirect subscribers at www.ratingsdirect.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:
Matthew Reining, San Francisco (1) 415-371-5044
David G Hitchcock, New York (1) 212-438-2022