NEW HAMPSHIRE G.O.'S LOWERED TO 'AA' FROM 'AA+' BY FITCH -- FITCH FINANCIAL WIRE --
NEW HAMPSHIRE G.O.'S LOWERED TO 'AA' FROM 'AA+' BY FITCH
-- FITCH FINANCIAL WIRE --
NEW YORK, Nov. 11 /PRNewswire/ -- The State of New Hampshire's general obligation bond rating is lowered to 'AA' from 'AA+' by Fitch. The action was taken in conjunction with an offering of $50-$60 million General Obligation Capital Improvement Bonds 1991 Series B (College Savings Bond Program) expected this week and affects $506.1 million outstanding bonds as well as the new issue. The new bonds, expected by negotiation through a syndicate led by Dean Witter Reynolds Inc., will include serials due Nov. 1, 1992-98 and capital appreciation bonds due Sept. 1, 1999-2011; they are not callable.
The recession has been particularly harsh in New Hampshire, causing a loss in non-agricultural employment of nearly 4 percent in 1990 and further losses in 1991, with the July figure down about 5 percent from the previous year. Personal income growth dropped dramatically in 1990, with the rate only about two-thirds that of 1989, and quarterly data in 1991 is negative. Other indicators such as housing values and building permits also continue to fall.
The state has been responsive to the adverse change in economic conditions, taking corrective budget measures in each of the past two fiscal years both to increase revenues and to reduce appropriations. Despite the actions, operating deficits have been incurred in each of the past three years, leading to an accumulated general fund deficit of $24.5 million at June 30, 1991. The budget for the 1992-93 biennium was designed to return to balance, but was premised on an opening deficit of $4.5 million, $20 million below the actual figure. Revenues for the first four months of 1991-92 are nearly 8 percent below budget and, most alarmingly, the $9 million shortfall in October alone exceeds the $6 million not realized in the first quarter. It is now estimated that revenues may be $50-$60 million below expectations for the year. Costs, largely representing recession driven entitlements, may be $10-$20 million over budget, even after appropriation reductions of $11.5 million. The accumulated deficit could reach $100 million or more by the June 30 end of the fiscal year.
While it can be expected that the state will continue to implement corrective measures, the somber economic outlook and the magnitude of the financial problem, which has expanded despite prompt reaction, diminish credit quality.
New Hampshire continues to have an excellent debt position, with net tax supported debt after the sale, assuming $60 million bonds are sold, amounting to $597.4 million, or $539 per capita and 2.6 percent of personal income.
/CONTACT: Claire G. Cohen of Fitch, 212-908-0552/ CO: ST: New Hampshire IN: SU: RTG KD -- NY064 -- 3136 11/11/91 15:59 EST