MOODY'S RAISES COMMONWEALTH OF MASSACHUSETTS GENERAL OBLIGATION BOND RATING FROM 'Baa' TO 'A'
MOODY'S RAISES COMMONWEALTH OF MASSACHUSETTS GENERAL OBLIGATION BOND RATING FROM 'Baa' TO 'A' NEW YORK, Sept. 9 /PRNewswire/ -- Moody's Investors Service today raised from "Baa" to "A" the rating assigned to the Commonwealth of Massachusetts general obligation bonds. Application of conservative revenue assumptions and efforts to impose spending discipline have reduced the Commonwealth's financial vulnerability and restored fiscal control; the general obligation bond rating is accordingly revised from "Baa" to "A." While still suffering the effects of economic adversity, Massachusetts last year exceeded its revenue targets, maintained budgetary balance despite setbacks in efforts to limit spending growth, and lessened its reliance on short- term borrowing to finance operations. The budget adopted for fiscal 1993 appears adequate to continue the Commonwealth on a path to restoring financial stability. The current circumstances stand in marked contrast to those of the late 1980s, when extended inaction in the face of falling revenue estimates, widening deficits, and an increasingly strained cash position -- marked by heavy reliance on borrowing to sustain operations -- seriously weakened the state's credit position and culminated in Moody's lowering its bond rating to "Baa" in March 1990. Significant among the factors contributing to last year's positive results was the improved communication and cooperation evident between the legislature and the executive branch, in contrast to the situation which prevailed earlier. While policy and budget issues remain the subject of vigorous dispute and debate, the current process has avoided unsettling surprises in the conduct of fiscal policy and has permitted the resolution of issues. The process of maintaining control remains critical, as risks to financial stability are still posed by economic stress, the financial burden and reduced flexibility dictated by a debt load now among the highest of the states, continuing spending pressures, and the uncertainty of savings expected from program changes. Massachusetts personal income rose only 1.7 percent in 1991, less than the inflation rate. Non-farm employment in the state dropped by nearly 10 percent from 1988 to 1991, and job losses continue in 1992. Debt service requirements for general and special obligation bonds alone are 8.2 percent of estimated fiscal 1993 spending requirements, nearly 30 percent higher than the fiscal 1991 amount. And budgeted funds spending, which actually fell 1.8 percent in 1992, is projected to grow by 8.8 percent in fiscal 1993. A complete list of related obligations affected by this rating change will follow. -0- 9/9/92 /CONTACT: George Leung, vice president, managing director, state ratings, 212-553-0342, or Steven Hochman, vice president, assistant director, state ratings, 212-553-0338, both of Moody's Public Finance Department/ CO: ST: Massachusetts IN: SU: RTG
KD-PS -- NY092 -- 7726 09/09/92 17:52 EDT
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|Date:||Sep 9, 1992|
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