State Treasurer Beth Pearce announced today that Moody’s Investors Service (Aaa rating), Fitch Ratings (AAA), and Standard and Poor Ratings Services of (AA +) reaffirmed their positive rating for the State of Vermont Bonds. Vermont has the highest general obligation bond rating of all New England states. Vermont is an elite group of only 14 states with at least two AAA rating. One only eight states have three AAA rating.
As part of a rating review for an upcoming sale of bonds, all three agencies maintained their previous high rating with a stable outlook. Moody’s and Fitch rate the Bonds triple-A, the highest rating available to government issuers. Standard & Poor rated AA + Bonds Vermont, the second highest rating. The higher bond rating, the more creditworthy the rating agency is reviewing a bond issuer to be.
“I am pleased that the agencies again recognized the financial stability and fiscal health of Vermont and recognized the unprecedented efforts of the State to recover from Tropical Storm Irene,” said State Treasurer Beth Pearce. “Favorable credit rating allows the State to secure a lower interest rate when borrowing money or refinancing a new loan outstanding. In turn, Vermont saves hundreds of thousands of dollars in taxpayer money by reducing our future debt payments. “
On March 5, the State is offering $ 25 million in the State of Vermont Citizen Bonds ($ 1,000 increments) and up to $ 72 million in general obligation refunding Bonds negotiated. Later that week, the State expects to issue $ 28 million in additional general obligation Bonds and $ 10 million in taxable general obligation Bonds in a competitive bid basis. Bonds are sold through registered agents / dealers. Money raised through sales of bonds of Vermont finance a wide range of legislatively authorized infrastructure and capital expenditure requirements.
While interest rates are condensed at the moment, Pearce said the state is still saving hundreds of thousands of dollars on a premium credit rating. He mentioned that the infrastructure and capital expenditure will result in economic and job growth.
In reaffirming their rating, the Vermont agency cited strong financial management, conservative debt management practices, prompt action to keep the budget in balance and maintenance of the budgetary reserve to their statutory limits .
“Our continuing goal is to eventually secure a triple-A rating from all three agencies. We can do that while we continue to develop a positive fiscal foundation by cooperation between my office, the Governor and the State legislature. We will further strengthen our position by proactively managing future debt obligations and the development of our rainy day reserve, “Pearce explained.
Vermont recently weathered a few storms rating. In July, Moody’s has advised 15 states with the highest credit ratings – including Vermont – that their status will assess whether the federal government defaulted. However, Moody was determined to check only five states and Vermont are not on that list. In August, Standard and Poor’s downgraded the U.S. credit rating from AAA to AA + with a negative outlook in the midst of concerns over the political process in the country and plans to meet budget deficits recorded. Vermont to AA + bond rating remained strong.
Pearce said the rating agencies were impressed with the rapid response of Vermont in dealing with Tropical Storm Irene, which hit on Aug. 28. This is the kind of fast, decisive action that agencies look for, she said. The agencies, she said, look at a state prudent fiscal management, prompt action on budget issues, as mentioned in Vermont’s ability to avoid budget deficits even by the “great recesion” collaboration between various arms of government, and low-risk debt.
Pearce said Vermont issues “vanilla” general obligation Bonds, while some other bond issuers can have more unique products promising higher yields. These things wise policy is in contrast to the federal government and many other states.
“Continued fiscal discipline of Vermont is particularly critical given the negative outlook in the United States’ credit ratings,” said Pearce.
The upcoming bond sales in March was originally scheduled for October 2011, but was changed after Tropical Storm Irene caused widespread destruction in the state. Sale was delayed to allow the State to assess the impact and costs associated with the storm.