BOSTON - Improved issuer disclosure breeds investor confidence, which in turn boosts Massachusetts' bond ratings, according to state Treasurer Steven Grossman.
"People respect the discipline and consistency of the commonwealth's budgeting process," Grossman said in an interview Thursday during the third annual Massachusetts investor conference, which Grossman considers central to Massachusetts' enhanced disclosure. "Long-term planning is a key ingredient in investor perception and so is the rainy-fund of $1.6 billion, which we are looking to enhance."
Moody's Investors Service rates the Bay State's general obligation bonds Aa1, while Fitch Ratings and Standard & Poor's assign AA ratings. According to Grossman, the state had triple-B ratings in 1990. "Our bonds trade well even with significant debt loads," he said.
Grossman, who gave the keynote address at the Boston Convention and Exhibition Center, said challenges to maintaining the high bond rating include an unfunded pension liability of $28.3 billion and a steep liability in other post-employment benefits, or OPEB.
According to a report that a special commission issued in January, the unfunded OPEB liability for state and local governments amounts to roughly $46 billion. Massachusetts has been allocating tobacco settlement funds toward the liability.
Grossman, who took office in 2011, said he and assistant treasurer for debt management Colin MacNaught set out early to improve disclosure. "Colin said of all the things we needed to accomplish, we needed to make Massachusetts number one in disclosure. It was one of his top priorities. He cited other states and cities that failed to communicate effectively."
Other moves have included a new investor website with access to real-time data and frequent investor calls, in addition to the conference, which MacNaught said drew more than 200 spectators for the third straight year.
Grossman, a Democratic candidate for governor next year with incumbent Deval Patrick not seeking re-election, said Massachusetts should not take its bond rating for granted. "No matter how proud you are, you can never feel extremely secure or complacent about your bond rating.
"Looking back 35 years to my days as a business owner, I always felt that no matter how satisfied you are, you can do a better job. We can do more," said Grossman, a former Massachusetts and national Democratic chairman. Before his election as treasurer, he was chief executive Grossman Marketing Group, a 102-year-old, fourth-generation family business in Somerville, Mass.