Moody’s upgrades Louisiana bond credit rating after 6 years


The new rating from Moody’s Investors Service will save the state about $750,000 a year in interest for every $300 million of bonds issued, said state treasurer John Schroder.

Louisiana has made significant progress “in restoring its financial reserves and liquidity in recent years by structurally aligning revenues and expenses, despite a general downward trend and volatility in oil and gas production and trends adverse demographics,” Moody’s said in a press release. Demographic trends include low population growth and low per capita income.

The rating, at Aa3 since the start of 2016, was raised to Aa2 on Wednesday.

“When I came to office, we faced a huge fiscal cliff and unstable finances,” Governor John Bel Edwards said. “Working with the Legislative Assembly, we were able to turn the tide. We now have surpluses instead of deficits, we are reinvesting in education and infrastructure, and we no longer rely on one-time money for recurring expenses.

Credit ratings from Moody’s and other Wall Street agencies help determine the interest rates charged when the state borrows money to finance roadwork and construction projects.

Two other companies also downgraded Louisiana’s ratings in 2016 and 2017 due to the patchwork budget approach used by former Governor Bobby Jindal and the legislature during his two terms, when budgets were balanced on funding public accounts. savings and property sales.

Edwards, a Democrat, and the Republican-majority legislature reached a seven-year sales tax deal in 2018.

“Between the pandemic and natural disasters, nothing we’ve done in the past few years has been easy, but our commitment to strong fiscal management is paying off for Louisiana,” Edwards said.

Schroder called the upgrade a long time, saying the past five years have shown “strong financial performance and significantly increased reserves.”

The 0.45% tax is due to expire in mid-2025, and state officials have made competing proposals on how to handle that. A bill would begin phasing out the tax next year. The other would spend its revenue for the next three years on a new bridge over the Mississippi River in Baton Rouge, an Interstate 10 bridge in Lake Charles, and the expansion of the Interstate 49 South corridor.

Source link


Comments are closed.