Fitch Revises Washington Outlook Upward to Stable

Fitch Ratings has revised Washington’s outlook to stable from negative ahead of its $864 million general obligation bond sale in August.

The agency affirmed the AA-plus rating on approximately $18 billion of the state’s outstanding GO bonds.

“The revision of the rating outlook to stable from negative reflects steady improvement in the state’s economic and revenue performance and passage of a biennial budget that continues to replenish a cushion against future underperformance,” analysts wrote in a report.

They also noted the state’s responsive financial management, as well as its moderate debt ratios and pension liabilities.

Credit strengths are offset by the state’s concentrated revenue system that is reliant on the sales tax, with no income tax, as well as above-average debt levels, Fitch said.

Standard & Poor’s also assigned the bonds a AA-plus rating with a stable outlook and affirmed the rating on the state’s outstanding bonds.

“The stable outlook reflects our view that the state’s liquidity, financial trends, and strengthening economy point to an improving financial position,” said Standard & Poor’s credit analyst Gabriel Petek. “We believe the favorable trajectory of these factors helps offset risks from the state’s acrimonious budget development process for the 2013-2015 biennium.”

The state is planning to sell $533 million of various purpose GO bonds, $275 million of motor vehicle fuel tax GO bonds, and $56 million of taxable GO bonds in a competitive sale on Aug. 7.

Proceeds will go toward financing various capital and outdoor recreation, habitat conservation, and farmland preservation projects in the state, as well as state and local highway improvements.

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