DALLAS - Fitch Ratings cited Louisiana's continued recovery from the dislocations caused by the 2005 hurricanes on Thursday for upgrading the state's general obligation debt to A-plus from A and its tax-supported debt to A from A-minus.
"The state has maintained sizable financial balances and realized exceptionally strong revenue collections, bolstered by high oil and gas and hurricane recovery-related revenues, although it remains to be seen how much of the recent revenue strength is sustainable over the long term," Fitch analysts Kenneth T. Weinstein and Richard J. Raphael said. "Economic recovery is evident, though progress has been slow in New Orleans, which was most affected by the storms."
The improved ratings cover $2.3 billion in outstanding state GO debt and a number of tax-supported issues, including $300 million of revenue bonds issued in 2007 by the Louisiana Public Facility Authority for the state's hurricane recovery program.
Louisiana ended fiscal 2006 with a surplus of $827 million, fiscal 2007 with a surplus of $1.1 billion, and expects to post a surplus of nearly $700 million for fiscal 2008, which ended June 30, when the final numbers are available.
The Fitch analysts said the state has "prudently applied [the surpluses] to long-term capital needs and liabilities."
Louisiana posted a historically low unemployment rate of 3.8% in 2007, due to a decline in the total labor force since the hurricanes. Personal income in Louisiana declined 8.5% in 2005, but rose 20.6% in 2006 and 10.5% in 2007 as high demand for labor and a smaller labor force led to higher wages in many sectors.
The improvement in the ratings followed similar actions last week by Standard & Poor's and Moody's Investors Service. Standard & Poor's raised Louisiana's GO rating to A-plus from A and the tax-supported debt from A-minus to A. Moody's raised the state's GO rating to A1 from A2 and tax-backed debt to A2 from A3.