Moody’s Investors Service announced Friday that it has boosted Ohio’s credit outlook from negative to stable, joining other credit agencies in doing so.
In addition, Moody’s said it has assigned an Aa1 rating to $430 million in General Obligation Bonds, and affirmed the ratings on the state’s outstanding general obligation bonds.
The credit agency said the move reflects “a record of strong financial management proven through generally proactive responses to budget shortfalls, recent revenue growth and improved financial position, and the expectation that excess revenues will continue to be used to rebuild reserves in the near term. The state’s satisfactory financial position is also demonstrated by the expected return to structural balance in fiscal 2013, and maintenance of strong liquidity. The Aa1 rating also incorporates a transitioning economy that remains somewhat vulnerable to disruption but has shown recent stabilization due to growth in manufacturing and service sectors.”
Going against the state, Moody’s said the state’s low reserve position leaves in vulnerable to any renewed economic or revenue disruption; any budget surpluses “will likely be relatively small, resulting in a protracted period to rebuild reserves”; the economy remains vulnerable to high gas prices and external disruptions, “given manufacturing industry exposure”; and a “lack of certain best financial management practices.”
Credit agency Standard & Poor’s made a similar move last summer, boosting the rating to “stable.”
Gov. John Kasich said he received the news Friday morning. Kasich said he, along with Budget Director Tim Keen, and representatives of JobsOhio, have been communicating the depth of Ohio’s recovery to Moody’s.
“I think the ability to show them that Ohio is not a one-trick pony matters. You know, there’s a sense on Wall Street, or wherever, that Ohio is just manufacturing — cars, autos. And autos are important to us, but it’s not just autos that work in Ohio. I think being able to explain the diversity of business is helpful here,” the governor told reporters Friday.
Kasich later released a statement saying, “Moody’s decision to upgrade Ohio’s credit outlook is fantastic news and affirms that Ohio is getting back on track. Today’s announcement marks the first time since February 2007 that all three rating agencies — Moody’s, Fitch, and S&P — have given Ohio an AA+ rating with a stable outlook. Over the past year, we’ve eliminated an $8 billion budget shortfall and implemented policies that foster a jobs-friendly environment and manage taxpayer dollars in a responsible way. It’s great to know that these efforts to make Ohio’s economy stronger are getting noticed.”
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