A second upgrade buoys Nevada ahead of bond sale
Nevada snagged its second rating upgrade ahead of its competitive sale of $196 million in general obligation bonds.
S&P Global Ratings upgraded the state’s GO rating Thursday to AA-plus from AA, affecting $1.2 billion in outstanding GOs. S&P also upgraded the state’s highway revenue improvement bonds to AAA from AA-plus, which applies to over $745 million of outstanding bonds.
The outlook is stable.
Nevada received an upgrade to Aa1 from Aa2 from Moody’s Investors Service Tuesday. Fitch affirmed the state’s AA-plus rating. Both gave stable outlooks.
The state plans to sell the bonds Nov. 19 in five different series, according to the state treasurer's office. Sherman & Howard is bond counsel. Zions Public Finance and JNA Consulting Group are advisors.
The state's structural budget management and strong budgeted reserves position the state well for the next downturn, said S&P analyst Sussan Corson.
The state expects to have $390 million in reserves by the end of calendar 2020 achieving reserves equal to 17% of expenditures in the $8.9 billion 2020-21 biennium general fund budget, Corson wrote.
The state's job growth has been broad-based and currently leads national trends, according to Corson, who added it has experienced 3.7% year-over-year job growth in first quarter 2019 with unemployment at 4.1% by August.
But she also warned that the state remains dependent on tourism and gambling, which exposes it to revenue volatility.
“I’m excited to see that our state’s fiscal performance and management combined with the economic progress we’ve made in recent years is being recognized,” Nevada Gov. Steve Sisolak said in a statement.
State Treasurer Zach Conine credited the joint work of the governor, Legislature and treasurer’s office for steps taken to achieve the upgrade.
“We are very proud that the rating agencies and broader market recognize Nevada’s robust financial performance and management, solid Rainy Day Fund, and the strength of our growing economy and population,” Conine said.