Utah Gov. Gary R. Herbert and Treasurer Richard K. Ellis announced today the closing of two refunding bond sales and the corresponding affirmation of the state’s superior general obligation bond rating by all three rating agencies – Standard & Poor’s (AAA), Moody’s Investors Service (Aaa) and Fitch Ratings (AAA). Utah is one of only ten states in the nation to hold a Triple-A credit rating from all three major credit rating agencies, and the state pays very low interest rates on its debt because of the superior ratings.
“Strong bond ratings provide external validation that we manage our state budget wisely and help us borrow at the best rates available when we need to finance large projects,” said Gov. Herbert. “We are very protective of these ratings something that many states have been able to do.”
The refunding transactions, similar to the refinancing of a home mortgage at a lower rate, will save the state more than $16 million.
“We closely monitor the state’s debt for these refinancing opportunities, and once again we saw extremely strong demand in the market for our bonds, which rewards our taxpayers with extraordinarily low borrowing costs,” said Treasurer Ellis.
Both sales were conducted competitively, with J.P. Morgan Securities submitting the top bid for the General Obligation bonds and Wells Fargo Bank winning the bidding for the State Building Ownership Authority bonds.
The agencies’ rationales for Utah’s ratings include:
Strong governmental framework with a constitutional requirement to maintain a balanced budget and a fiscal policy that allows for changes to the revenue structure and program spending by a simple majority of the Legislature.
The state’s conservative debt and fiscal policies have kept debt levels moderate and quickly amortizing and have allowed for successful and timely action when addressing budgetary imbalances.
Utah’s closely managed and well-funded pension and other post-retirement benefit plans.
Utah’s continuous history of AAA bond ratings dates back to 1965 when Standard & Poor’s initiated its rating system. The state’s AAA rating with Moody’s dates back to 1973, and with Fitch Ratings back to 1992.