Officials in Georgia are expecting strong demand when the state comes to market with $886 million of general obligation bonds.
Ahead of a three-tranche competitive sale June 27, Moody's Investors Service, S&P Global Ratings and Fitch Ratings all affirmed their triple-A ratings of Georgia.
"Georgia is a premier credit with an all-time high level of reserves and recently confirmed triple-A ratings by Fitch, Moody's and S&P," said Mary Garver, director of bond financing at the Georgia State Financing and Investment Commission. "The state has not issued general obligation debt since July 2022 and will be able to take advantage of strong summer redemption money. We expect the bonds to be very well received by the market."
The ratings apply to $421.5 million GO bonds, series 2023A, tax-exempt; $203.6 million GO bonds, series 2023B, federally taxable; and approximately $261 million GO refunding bonds, series 2023C, tax-exempt.
All three rating agencies cited the state's diversified economy and tax base and strong financial planning as key to providing security amid an unstable marketplace and recent across-the-board revenue declines.
"The triple-A long-term rating reflects our view of Georgia's overall very strong governmental framework and responsive financial and budget management practices that have enabled consistent and timely adjustments to general fund expenditures across credit cycles," said S&P analyst Thomas Zemetis.
Public Resources Advisory Group and Terminus Municipal Advisors are the financial advisors and Gray Pannell & Woodward is the bond counsel.
Proceeds from the series 2023C refunding bonds will refund the previously issued series 2013D GO bonds.
Proceeds from the series 2023A and 2023B will finance capital projects at state departments and agencies as well as capital grant programs for municipal entities like county governments and school authorities.
There's an "urgent need" in Georgia to help offset cost increases in local government, in part linked to rate increases in providing coverage through the State Health Benefit Plan, while funding capital work identified by municipal entities, said the Georgia Budgetary Policy Institute in a review of the fiscal 2024 spending plan.
Georgia has maintained its triple-A bond rating from all three rating agencies for more than 25 years and the state's access to low interest rates, as well as overall low debt levels, could be a major asset in addressing both needs; as Georgia's "made less use of its capacity to borrow for investments" recently, it retains to ability to take on more debt should it need to, the report said.
"Although Georgia's Constitution limits annual debt to 10 percent of the prior year's revenue collections, the state projects its annual debt service to fall far below that limit at just 4.3 percent in FY 2024," the report said. "Due to the state's long-held AAA bond rating, Georgia can borrow at low interest rates to finance capital projects."
The opinions of the institute, which states support for diversity and inclusion, opposition to racism, and a goal of expanding economic opportunity to all Georgians, aren't likely to carry much sway with the GOP-dominated state government.
