LOS ANGELES — Nevada received across-the-board rating affirmations ahead of plans to sell $345 million in general obligation limited tax bonds competitively on Oct. 14.
The GOLTs are rated Aa2, AA-plus and AA by Moody’s Investors Service, Fitch Ratings and Standard & Poor’s, respectively. All assign stable outlooks.
The state plans to sell the GOLTs in four series: the $256 million Series 2015D capital improvement and refunding bonds, $20.9 million Series 2015E natural resources and refunding bonds, $47 million Series 2015F Nevada Municipal Bond Bank and refunding bonds; and $10 million Series 2015G open space, parks and natural resources bonds; and $10.5 million of Series 2015H safe drinking water act revolving fund matching and refunding bonds.
All three rating agencies cited the state’s improving economy and fiscal conservatism reflected in low debt levels that help counteract the volatility of its primary revenue sources of gambling and tourism.
The state experienced tumultuous growth in its real estate markets during the economic boom, which reversed into a severe drop when the housing market tanked in 2008. The state’s unemployment rate hit a peak of 14.5% in December 2010, but had fallen to 6.8% in August, according to the U.S. Bureau of Labor Statistics.
The budget for the 2016-17 biennium attempts to restructure the revenue system to more accurately reflect economic activity, Fitch said.
Gov. Brian Sandoval and the state legislature took a structurally oriented approach In developing the state’s 2015-2017 biennial budget, rather than cobbling together a package hinging on maintaining budget austerity, said S&P Analysts Gabriel Petek and Sussan Corson in their report.
Following Sandoval’s lead, state lawmakers revamped and made permanent temporary tax measures, rather than extending them for a fourth biennium, Petek and Corson said.
The state has below-average liabilities, an improving economy and a balanced budget which provides stability for a state budget funded with a volatile revenue system, Fitch analysts said.
The state has $1.9 billion of tax-supported debt, according to Moody’s report.
The bonds are a general obligation of the state, to which its full faith and credit are pledged. Debt service is supported by a statewide property tax levy that is subject to both constitutional and statutory limitations.