LOS ANGELES — The rating on $172 million of Montana Board of Investments revenue bonds received a Moody's Investors Service upgrade to Aa2 from Aa3 citing the board's long track record of conservatively managing investments.

Moody's on Friday also assigned a stable outlook and affirmed the VMIG 1 short term rating on the board's $97.3 million of outstanding Annual Adjustable Rate Tender Option Municipal Finance Consolidation Act bonds, also called the INTERCAP Revolving Program.

"The stable outlook reflects the board's conservative policies and sound management of the funds under its responsibility, including substantial liquid balances in the Treasurer's Fund and Coal Severance Tax Trust Fund," according to analysts.

The rating agency also upgraded to Aa2 from Aa3 the board's $73.9 million of outstanding rated Health Care Facilities Revenue Bonds, the master loan program, issued by the Montana Facilities Finance Authority.

The board is responsible for the investment of public funds and the administration of various business and local government financing programs, but has no taxing power. Total investments managed by the board as of September 30, 2016 were approximately $16.9 billion, Moody's wrote.

The Aa2 rating is notched once off the state's Aa1 stable general obligation rating because the "board is an integral arm of the state, but has a smaller available pool of resources than the state and no taxing authority," analysts wrote.

The board's irrevocable pledge to pay principal and interest on the bonds if amounts in the bond fund and reserve fund should be insufficient and the strong legal structure was a factor in the rating, Moody's wrote.

The VMIG 1 short-term rating is based on the board's irrevocable pledge to purchase tendered but unremarketed bonds from available funds with five days' notice prior to the bond purchase date, Moody's wrote. The board maintains ample and highly liquid available funds in certain state statutory trust funds and has a strong legal structure to support the purchase of the bonds, if needed.

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