NEW YORK - Standard & Poor's Ratings Services said it has assigned its AA-minus rating to the Maine Governmental Facilities Authority's lease rental revenue refunding bonds series 2010A and affirmed its AA rating on the authority's GO debt outstanding, AA-minus rating on the authority's lease debt outstanding, and A rating on the authority's debt backed by the state's moral obligation. At the same time, Standard & Poor's revised the outlook on all of these bonds to negative from stable.
"The outlook revision reflects the state's weakened financial position and diminished liquidity," said Standard & Poor's credit analyst Henry Henderson. "Although a supplemental budget has been proposed to close the 2010-2011 budget gap, lack of timely action to balance the budget which leads to further erosion of financial position and liquidity could lead to a downgrade," he added.
The rating reflects Maine's unemployment rates, which are better than national levels, despite recent employment declines; adequate-to-good income levels; and favorable debt position with a low debt burden and rapid amortization of debt outstanding.
The series 2010A lease revenue bonds are secured by lease payments from the state, pursuant to a master lease agreement dated Aug. 1, 1999, and are subject to appropriation. The state's full faith and credit pledge secures the GO debt. These bonds will be used to refund lease revenue bonds outstanding issued by the authority.
The negative outlook reflects Standard & Poor's view Maine's weakened financial position and diminished liquidity. The state faces a significant budget gap for the 2010-2011 biennium and has yet to implement corrective measures to restore balance. Although a supplemental budget has been proposed to close the 2010-2011 budget gap, lack of timely action to balance the budget that leads to further erosion of financial position and liquidity could lead to a downgrade.
