State Treasurer Dale R. Folwell, CPA announced today that S&P Global Ratings has affirmed its 'AAA' long-term rating on North Carolina's outstanding general obligation (GO) bonds. Additionally, the agency affirmed the state’s 'AA+' rating on appropriation-backed obligations including Build NC bonds and those issued by the North Carolina Turnpike Authority.
In a release, S&P Global Ratings credit analyst Joe Pezzimenti said, “We believe North Carolina's credit profile benefits from strong economic growth, state's ability to manage revenues to support expenditure mandates, well-defined financial management policies, and a commitment to maintaining balanced biennial budgets and preservation of very strong reserves."
S&P Global Ratings is one of three major credit rating agencies, along with Moody’s Investors Service and Fitch Ratings, that rate companies, states and countries. They assign a letter grade to indicate the entities’ credit worthiness on a scale of ‘AAA’ (the highest) to ‘D’ (the lowest). All three major national bond rating agencies have reaffirmed North Carolina’s AAA bond rating in the past. North Carolina is one of only 13 states that have an ‘AAA’ rating from all agencies.
“Having these ‘AAA’ ratings ensures that we can borrow money at the lowest possible rates which results in the state having more buying power,” said Treasurer Folwell. “Ultimately, the credit for these ratings goes to the taxpayers of North Carolina and the North Carolina General Assembly for their strong fiscal management.”
S&P Global also said in the statement, that the GO rating reflects their view of the state’s:
Historically strong economic growth trends supported by diverse employment sectors;
History of prudent fiscal management--this includes making difficult budget decisions to restore fiscal balance when necessary, as well as managing surpluses when they occur, to retain structural budget balance, and building and replenishing reserves drawn on to mitigate impacts of severe weather events;
Low-to-moderate debt burden, with above average amortization and state borrowing subject to debt affordability guidelines, which we believe is an important credit factor for a growing state;
Well-funded pension system and progress in addressing other postemployment benefits (OPEB) liabilities; and
Institutional framework that supports the predictability of the state's budgeting and operations, in our view.
The N.C. Department of State Treasurer’s State and Local Government Finance Division manages the sale and delivery of all state and local debt and monitors the repayment of state and local government debt. More information can be found at http://www.nctreasurer.com/slg