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Moody’s: State economic outlooks stabilizing

Improving economic conditions are helping states rebuild balanced budgets after years of recessionary turmoil, creating a stable outlook for the vast majority of state bond ratings, according to Moody’s Investors Services.

The bond rating agency says 44 states have stable outlooks, and another two states earn positive outlooks. In one measure of the post-recession stability created by higher tax revenues, for the first time in years every state adopted its Fiscal Year 2014-2015 budget on time.


Source: Moody’s Investors Service

Fifteen states maintain an Aaa bond rating, the highest that Moody’s awards, and another 15 maintain an Aa1 rating, the second-highest. Arizona and Michigan each have positive outlooks.

Three states — Wyoming, South Dakota and Nebraska — don’t issue general obligation debt, meaning there are no bonds for Moody’s to rate.

At the bottom end of the spectrum, Illinois has a low A3 rating, and New Jersey is saddled with an A1 rating. Lower ratings mean states must pay more to borrow money from investors, who face a higher risk of default. Illinois, New Jersey and Rhode Island all have negative credit outlooks, Moody’s said.

Five states — Missouri, South Carolina, Utah, Virginia and Maryland — have maintained their Aaa bond rating for decades. All five were initially rated at the top of the heap between 1971 and 1973.

Reid Wilson covers national politics and Congress for The Washington Post. He is the author of Read In, The Post’s morning tip sheet on politics.

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