Moody's Investors Service has revised the outlook for Michigan's general obligation and related debt to positive from stable, and assigned the state's existing Aa2 G.O. rating to the planned issuance of $200 million in general obligation school loan bonds, Series 2013A (taxable).
Proceeds of the current issue will be deposited in the state's school loan revolving fund, for the purpose of making loans to school districts.
Revision of the state's outlook to positive from stable reflects Michigan's progress in rebuilding financial reserves and running structurally balanced budgets, which signals an improving credit trajectory.
The dramatic downsizing of the Detroit-based U.S. auto industry, culminating in 2009, eroded Michigan's economic base and depleted its finances. Now Michigan is rebuilding its balance sheet, in keeping with its historically strong management practices, as the auto industry stabilizes.
While many local governments in Michigan are financially troubled, this exposure is unlikely to impose unmanageable, direct financial burdens on the state.
