DALLAS — Louisiana saw its second bond rating upgrade in two days yesterday as Moody’s Investors Service raised the state’s general obligation rating to A1 from A2. Appropriations-backed debt was raised to A2 from A3.
The increase follows the upgrade by Standard & Poor’s on Tuesday of the state’s GO ratings to A-plus from A and from A-minus to A for appropriations-backed debt.
The improved ratings apply to more than $2 billion of outstanding debt.
The upgrade came from the agencies’ reviews of the state’s planned July 15 sale of $200 million of GO bonds. The new debt will refund the $200 million of Gulf Opportunity Zone tax credit bonds issued in 2006 for local government debt service relief following the hurricanes of 2005.
The Moody’s analysts cited the state’s steady recovery from the devastation caused by hurricanes Katrina and Rita in 2005, as well as growth in the state economy and finances.
Louisiana posted a $1 billion cash surplus for the end of fiscal 2007, and expects another large surplus in fiscal 2008. Unreserved, undesignated general fund balance and rainy-day funds have grown to almost 14% of operating revenues.
The economic boost provided by federal government recovery aid has been significant and should continue, the ratings report said.
The federal government has allocated some $25 billion for disaster recovery in Louisiana, but only $10 billion has been spent. Of the unspent funds, $4 billion is earmarked for housing, with almost $10 billion designed for infrastructure projects.
“The remaining $15 billion of allocated but unspent federal disaster recovery funds ensure a steady source of capital to sustain the state’s rebounding economy,” said analysts Emily Raimes and Maria Coritsidis.
Louisiana’s GO debt is rated A by Fitch Ratings.