S&P Revises Vermont Outlook to Positive

Standard & Poor’s has revised the outlook on Vermont’s general obligation bonds to positive from stable and affirmed its AA-plus rating ahead of a $90 million bond sale.

“The outlook revision reflects the potential for us to raise the rating if the state continues to make progress in improving its annual pension funding levels, strengthening its annual pension funded ratios, and increasing its budget reserves,” said analyst Henry Henderson.

The state ended fiscal year 2011 with reserves in the general fund, transportation fund, and education fund fully funded at their maximum statutory levels of 5% of the previous year’s expenditures, and a general fund operating surplus of $65.6 million, according to the Standard & Poor’s report.

“S&P’s positive outlook affirms the steady fiscal course we’ve set to maintain and build our budget reserves and prudently manage the state’s finances,” said Vermont Treasurer Beth Pearce.

“The positive outlook enhances the state’s reputation in the bond marketplace, making Vermont’s bonds more marketable and lowering our costs to borrow money.”

Vermont will enter the marketplace on Monday, with $27 million of Series E citizen bonds and $63 million of Series F general obligation bonds.

The Series E bonds will be priced by Citi and offered first to retail investors, followed by institutional investors.

The bonds will mature from 2014 through 2024.

The Series F bonds will be offered competitively, with maturities ranging from 2013 through 2032.

Edwards Wildman Palmer LLP is bond counsel.

Proceeds from the sales will finance school construction, major maintenance and construction at the University of Vermont and the Vermont State Colleges, and a wide range of other projects in Vermont.

Standard & Poor’s said its AA-plus rating reflects the state’s strong financial management that has helped Vermont maintain a good financial position in an environment of declining revenue and rapid GO debt amortization.

Moody’s Investors Service and Fitch Ratings both assign triple-A ratings and stable outlooks.

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