DALLAS - Standard & Poor’s has removed New Mexico Finance Authority’s AAA rating from its watch list for a downgrade but maintains a negative outlook.

The agency, which issues debt on behalf of the state and local governments, has been unable to access the market since July, when officials reported that an audit cited in a March bond issue had been falsified.

Former NMFA controller Gregory M. Campbell was indicted in September on charges of submitting a forged audit for the fiscal year 2011 and circulating that audit to bond investors.

The NMFA board also fired the agency’s chief executive, Rick May, after members met in a closed-door session in September.

May, who joined the authority last year after serving as Gov. Susana Martinez’s cabinet secretary of the Department of Finance and Administration, was replaced by former state budget director John Gasparich as interim CEO.

Ratings analysts are waiting for the outcome of a new forensic audit of the agency before acting on a possible downgrade.  The investigation of the financial situation is expected to be completed in November.

Moody’s Investors Service last week extended its watch list period for a possible downgrade of NMFA’s Aa1 senior-lien and Aa2 junior-lien debt.

S&P’s negative outlook reflects Standard & Poor’s concern that the authority’s potential lack of oversight and internal controls could result in a deterioration of credit quality, analysts wrote in a report issued Monday.

“Our primary concerns continue to be the oversight related to the authority’s financial position, particularly as it relates to gross receipts tax revenues, borrower loan payments, the common reserve fund, and the contingent liquidity account, though the common reserve fund is held by the trustee,” said Standard & Poor’s analyst James Breeding.

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