States are likely to step up bond issuance in fiscal 2009 in response to declining revenue, which will continue to worsen even after the national economic downturn ends, Standard & Poor's said in its 2008 "report card" on the states.

"For the next year, state budgets are likely to be strained because of revenue volatility amid the housing market decline and a general economic slowdown," credit analyst Robin Prunty, an author of the report, said in a release. "This could ultimately lead to significantly higher debt issuance to meet budget requirements, a trend seen in prior downturns."

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