West Virginia estimated it saved about $4 million on a $37.7 million general obligation road refinancing deal last week after Moody’s Investors Service upgraded the state’s GO rating to Aa1 from Aa2.

The upgrade, which was unrelated to Moody’s recent rating recalibrations, affected $603 million of outstanding GOs.

It was Moody’s first natural state upgrade this year, according to a spokesperson.

The upgrade “reflects the state’s ongoing trend of fiscal conservatism” and the state’s ability to reduce its outstanding other post-employment benefits liability, Moody’s said in a report.

West Virginia is one of a handful of states that avoided a budget shortfall in fiscal 2009. The state cut spending in fiscal 2010 and ended the year with a 2.5% operating surplus to revenues. The state does not expect to tap reserves in fiscal 2011.

Gov. Joe Manchin 3d praised legislators for their work to make “difficult decisions” over pension reform.

“It is hard to go home and campaign, 'Guess what, I balanced the budget.’ That’s not the sexy thing that gets people elected,” Manchin said in an interview last weekend with The Bond Buyer. “But in these difficult times, to be able to do those things really gives you a leg up on campaigning.”

West Virginia’s GOs are rated AA by Standard & Poor’s and Fitch Ratings.

The GO ratings applied to $35.1 million of tax-exempt GO state road refunding bonds that competitively priced on Thursday.

Hutchinson, Shockey, Erley & Co. won the deal with a true interest cost of 3.1521%.

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