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Cleveland Plain Dealer...
Ohio’s
credit outlook upgraded by
Standard & Poor’s
By Peter Krouse, The Plain Dealer
Saturday, July 16, 2011
Standard
& Poor’s Ratings Services
upgraded Ohio’s credit outlook on Friday, a forecast that bodes well
for the
economically challenged state’s future borrowing needs.
S&P
kept the state’s rating at
AA+, but improved the outlook from negative to stable.
The
change means S&P expects Ohio
to be a better credit risk going forward, said Kasich spokesman Rob
Nichols,
and if the state’s rating is eventually upgraded to AAA, the highest
rating,
that should mean lower costs of borrowing and a savings to taxpayers.
The
upgrade reflects progress made in
restoring structural balance to the state’s budget through 2013, as
well as a
“modest economic recovery underway” that allowed for a contribution to
the
state’s rainy day fund that is set aside for fiscal emergencies,
according to a
announcement posted on S&P’s Web site.
Gov.
John Kasich reveled in the announcement.
“This
is great news for Ohio,” the
governor said in a prepared statement. “Standard & Poor’s
decision to
improve Ohio’s credit outlook for the first time in two years is a real
show of
confidence in the positive things we’re doing. It’s encouraging that
our
accomplishments are beginning to move the needle like this and be
noticed by
independent financial analysts like those at Standard & Poor’s.”
The
S&P report states that since
Ohio’s economy was hit hard by the recession, it “is steadily
recovering.” It
cites an unemployment rate that fell from 11 percent in March of 2010
to 8.6
percent in May.
“Positive
employment trends have
contributed to income and consumer spending growth, which has
positively
affected revenues,” according to the report.
But
the prospects of a slow economic
recovery could mean continued pressure on the state’s budget, the
report
stated.
‘AA’
rating means “Very strong
capacity to meet financial commitments,” according to the Standard
& Poor’s
website. Only AAA is higher. S&P sometimes adds a plus or a
minus to a
rating “to show relative standing” in certain rating categories,
according the
website.
Also
on Friday, S&P assigned AA+
rating to $416.75 million in Ohio general obligation refunding bonds.
Fitch
Ratings, another credit rating agency, gave the same bond issue its AA+
rating,
the second highest that it offers, while affirming the AA+ rating on
$7.6
billion of the state’s outstanding general obligation bonds and the AA
rating
on $2.4 billion of appropriations-backed state bonds.
Fitch
called the Ohio economy “broad
and diverse,” but that it remains exposed to a disproportionately large
manufacturing sector.
Read
it at the Cleveland Plain Dealer
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