WILMINGTON – Delaware once again received the highest possible bond ratings from all rating agencies ahead of the state’s issuance of $300 million in general obligation bonds later this month.
The news that all four major bond rating agencies – Fitch Ratings, Moody’s Investor Services, S&P Global and Kroll Bond Rating Agency (KBRA) – upheld Delaware’s AAA bond rating in January reviews was heralded by Gov. John Carney’s office in a Wednesday, Jan. 15, announcement. The state last queried ratings agencies in August and next plans to issue its 2020A series of bonds Jan. 22.
The ratings are important because higher grades translate into lower interest costs in repayment of the bonds. The agencies look at a variety of criteria, including a state’s economy, government’s financial performance and management, debt load, long-term costs, and political structure. States that analysts believe could better whether recessions or economic downturns are in turn seen as safer risks and awarded higher ratings.
“Over the last three years, we have climbed out of a $400 million budget deficit to create a $200 million surplus,” Carney said in a statement. “These are funds that will ensure Delaware has the flexibility to continue making improvements to our schools, our local economy, and the overall health of our state.”
The agencies noted the successful efforts the Carney administration and the Delaware General Assembly to bolster reserves by creating a new Budget Stabilization Fund that has a current balance of $126 million with S&P stating that “we believe the state can maintain better credit characteristics than the U.S. in a stress scenario.”
The ratings agencies also cited Delaware’s improving economy, including the state’s growing banking, health care, and incorporations industries, as well as the acceleration of investment activity at the Port of Wilmington, the STAR Campus at the University of Delaware, and large-scale logistics facilities in Newport and Delaware City.
Moody’s stated that “Delaware has exhibited strong budget management throughout this extended period of national economic expansion. Its conservative budgeting practices helped to rapidly rebuild its financial resilience after the Great Recession and to maintain strong balances and financial cushion.”
KBRA’s rating noted Delaware’s “strong financial position and liquidity and a diverse economy anchored by financial services, chemicals and related industries, the health care sector and higher education.”
Fitch stated that Delaware “has exceptional financial resilience and institutionalized protections are designed to ensure surplus operations.”
“Delaware’s triple-A ratings are the result of the sustained hard work of all three branches of state government, all of whom share the same goal, to operate our state as efficiently as possible while ensuring the financial security of current and future generations of taxpayers,” Delaware Finance Secretary Rick Geisenberger said in a statement.
By Jacob Owens
jowens@delawarebusinesstimes.com
