SALT LAKE CITY – Gov. Gary Herbert and state Treasurer David C. Damschen announced Thursday that S&P Global, Moody’s Investors Service and Fitch Ratings have reaffirmed the state’s “Aaa” credit rating.
The rating affirmations coincide with the upcoming release of the Preliminary Official Statement and Notice of Bond Sale for the legislatively authorized $146.3 million transaction, which will fund a portion of the state prison project and several transportation projects.
“I am proud that Utah is one of the 10 states receiving a Aaa rating by all three rating agencies again this year,” Herbert said in a statement provided by the governor’s office.
“Our triple-triple rating and broad economic success can be largely credited to the the principles of fiscal discipline and budgetary restraint, which we have worked closely with the legislature to maintain year after year. These bond ratings have again proven that thoughtful money management practices lead to continual growth and stability.”
Last week, Damschen and the governor’s State Budget Director Phil Dean traveled to New York City to meet with the agencies to secure ratings in preparation for the state’s upcoming bond issue.
“Utah’s conservative fiscal principles and wise money management practices earn the highest credit ratings, allowing us to finance large projects at the very best rates available – saving Utah taxpayer dollars,” Damschen said in the statement.
“Utah is a national fiscal leader with enviable economic growth due in part to our staunchly conservative approach to state finances, debt management and other financial policies – and I applaud the Utah team for this collective achievement.”
Utah’s history of continuous Aaa bond ratings dates back to 1965, when S&P initiated its rating system. The state’s Aaa rating with Moody’s dates back to 1973, and with Fitch Ratings back to 1992.
As cited in the rating reports, the agencies’ rationales for Utah’s ratings include:
- The state’s conservative debt and fiscal policies, which have kept debt levels low and quickly amortizing, and have allowed for successful and timely action when addressing budgetary imbalances.
- A diversified state economy that is emerging as an important regional center in information technology, finance and business services.
- Application of a number of strong management practices, such as binding consensus revenue forecasting, multi-year financial planning, budget stress testing review, and a debt affordability analysis.
- A young, well-educated workforce and an unemployment rate that is among the lowest of the 50 states.
- Low long-term liabilities, with the combined burden of net tax-supported debt and adjusted unfunded pension liabilities equal to 3.6% of 2015 personal income, compared with a 5.1% median for all U.S. states.
- A very strong ability to close budgetary gaps during a cyclical downturn, based on its demonstrated controls over spending, ability to raise revenues when necessary, and access to reserves.
The Office of Utah State Treasurer will receive competitive bids for the bonds Tuesday, utilizing an electronic system designed to rank submitted bids in real-time, ensuring that borrowing costs are minimized and the low cost bidder is identified immediately following the bid deadline.