(The Center Square) – Three credit rating agencies say Michigan has a strong financial footing.
“Michigan is on the move, with low unemployment, a diversifying economy, and strong fiscal fundamentals,” Gov. Gretchen Whitmer said in a statement. “All three ratings agencies reaffirming our credit ratings proves that the work we are doing is working. Michigan delivers for working families and is open for business.”
Before issuing $390 million in Michigan Building Authority bonds, the credit ratings agencies reviewed the state’s economy, governance, and finances to determine a credit rating.
Moody’s Investors Service reaffirmed its Aa1 rating with a “stable outlook,” noting the state has effective financial forecast practices, budgetary reserves at record levels, and an increasingly diverse economy. Michigan’s governance practices make the state likely to respond rapidly to developing economic or fiscal downturns, Moody’s stated.
Fitch Ratings reaffirmed their AA+ rating with a “stable outlook,” stating that Michigan has a high level of financial resilience and low long-term liability burdens.
Standard & Poor’s reaffirmed their AA rating with a “stable outlook,” adding that Michigan has enacted good budget practices, increased its “rainy day” fund, and is likely to have strong economic performance.
“Great credit ratings with a consistently stable outlook have a tangible impact on the everyday lives of Michiganders,” Treasurer Rachael Eubanks said in a statement. “It means the state of Michigan can borrow money at a lower interest rate to clean up the environment, support higher education facilities or other state needs, creating savings that can be used on other important projects. The state’s credit rating also directly benefits local school districts, many of which utilize the state’s strong credit to issue bonds for their own school building projects. A great credit rating is also a testament by Wall Street to our noted track record of smart financial decisions and a thriving economy.”
Money from the State Building Authority bonds will pay for a portion of the facilities program, which includes state university and community college facility projects, the new Caro Center State Psychiatric Hospital administration and hospital facilities, and refinancing existing debt for interest rate savings.
The credit rating agencies rated the bonds one notch below the general obligation credit ratings of Michigan because the Michigan State Building Authority’s bonds are an appropriation credit of the state.
