Fitch Rating...
Fitch
Gives Highest Possible Rating
for Ohio General Obligation Bonds
Credits Treasurer Josh Mandel’s
conservative investment strategy and careful financial management as
key
factors
November 30, 2011
COLUMBUS
- Amidst yesterday’s news of
Fitch downgrading the United States’ outlook from stable to negative,
Ohio
Treasurer Josh Mandel is announcing Fitch giving the highest possible
short
term rating of F1+ for Ohio’s general obligation (GO) bonds. Fitch credited the Ohio
Treasurer’s
conservative investment strategy and careful financial management as
key
factors in making this decision. Fitch
also cited notable increases in the state treasurer’s liquidity
account, even
amidst a struggling economy and tepid national growth, as well as the
state’s bolstering
of its once depleted rainy day fund.
“As
Treasurer I have focused on
tightening the belt of government, reducing budget costs by
streamlining
operations and eliminating waste, and being a watchdog over Ohio
taxpayers’
hard earned money. We
have made tough
decisions to ensure that even amidst economic volatility, Ohio taxpayer
dollars
are protected,” said Treasurer Mandel.
“State lawmakers in Ohio have tackled budget
deficits and spending
imbalances head on, and our credit ratings have improved as a result. In the Treasurer’s office
we have worked hard
to optimize the state’s liquidity portfolio, which has also contributed
to
these positive credit ratings.”
Fitch
Ratings affirmed the F1+
short-term rating on Ohio’s approximately $650.7 million adjustable
rate GO
bonds, for which the Treasurer’s office provides liquidity. The F1+ rating is Fitch’s
best quality grade,
and indicates an exceptionally strong capacity for timely payment of
financial
commitments.
In
Fitch’s credit summary that accompanied
the release of Ohio’s F1+ rating, they noted, “The rating reflects the
strength
of the state’s general obligation credit, the ample liquidity provided
by
investments in the state treasurer’s liquidity account, and the
procedures in
place to insure timely payment of optional tenders of bonds that have
not been
remarketed.” They
also noted, “The
investment profile is conservative as the fund is invested in U.S.
Treasury and
agency securities, highly rated commercial paper, and money market
funds.”
Fitch
also cites Ohio’s improved
budget stabilization fund balance in their rating.
Ohio’s budget stabilization fund reached a
low point in 2009 under previous administrations when the fund had been
depleted down to just $0.89.
In
July, Ohio’s AA+ credit rating
outlook was raised by Standard & Poor’s from “negative” to
“stable,” in
part because of conservative management of debt in the Treasurer’s
office. This rating
was given even as S&P issued
a historic downgrade of the federal government.
In
August, the State Treasury Asset Reserve
of Ohio (STAR Ohio) - a $4 billion pooled investment fund for
government
subdivisions ranging from municipalities to school districts - received
the
highest rating possible from S&P, AAAm, even as 14 similar
state and local
government investment pools were downgraded.
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