SAN FRANCISCO - Standard & Poor's yesterday upgraded Montana's general obligation credit to AA from AA-minus. The outlook is stable.

"The raised rating reflects the state's improved financial performance and reserve levels that, even when including a projected spend-down thereof, act as a necessary buffer against the state general fund's historic revenue volatility and one-time expenditure needs through fiscal 2009," Standard & Poor's analyst Paul Dyson said in a news release.

The upgrade affects about $200 million of outstanding debt, including a forthcoming $3.1 million issuance of long-range building program GO bonds.

The upgrade follows four consecutive general fund surpluses from fiscal 2003 through fiscal 2007, which ended with a "strong general fund surplus of $149 million, or a healthy 8% of budget," according to Standard & Poor's. That brought Montana's unreserved fund balance to an all-time high of $549 million.

Analysts said the state's cyclical economy is an offsetting credit factor because of its concentration in agriculture, mining, and tourism.

Moody's Investors Service affirmed its Aa2 rating for Montana GOs Tuesday. Fitch Ratings upgraded the credit to AA in June 2007.


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