Delaware receives triple-A credit rating
Delaware has received a triple-A credit rating from all three major rating agencies for the 16th time in a row. It’s the highest mark a government agency can achieve and Delaware is one of just 15 states to earn the straight-A rating this year, according to state officials.
Moody’s Investors Service, Fitch Ratings, and Standard & Poor’s (S&P) Rating Services recognized the state’s strong fiscal practices, as well as the strength of Delaware’s economy and labor market in its findings.
The reports take into account expected workforce reductions in the first quarter of 2016 due to DuPont’s merger with Dow Chemical. In December, the Wilmington-based chemical giant announced it intends to cut 1,700 Delaware based jobs — almost 30 percent of its workforce — as part of a $700 million cost reduction and restructuring.
But S&P cited positive trends and continued growth in other employment areas – including business services, financial activities, education, health, leisure and hospitality.
S&P said the rating reflects the state’s diverse economy “which continues to expand at a modest pace and in line with national trends.” The report also cited the state’s strong financial and budget management, “consistently strong general fund reserves,” “liquidity during recessionary periods,” a “moderate overall debt burden,” a “well-funded pension system.”
“Delaware has a long history of what we view as prudent fiscal management,” the report said. “This includes making difficult decisions to restore budget balance when necessary, as well as managing surpluses when they occur, to retain structural budget balance.”
It also noted positive trends and continued growth in other employment areas — including business services, financial activities, education, health, leisure and hospitality.
“These reports affirm our progress in strengthening Delaware’s economy, while budgeting responsibly,” said Gov. Jack Markell. “Recognition of Delaware as one of the top-rated states shows Delaware is well-positioned for continued success. However, our work is never finished. We must continue efforts to prepare our workers with the skills they need to compete for jobs, foster a nurturing environment for businesses to start and expand in the state, and ensure our budget is sustainable for years to come.”
“Delaware has maintained its triple-A ratings through some challenging economic cycles — in large measure due to our disciplined adherence to responsible fiscal practices and focus on economic development,” said Secretary of Finance Thomas J. Cook.
“Even through the Great Recession, this administration has maintained the highest possible credit ratings through strong financial management and fiscal discipline, while improving our business climate,” said Cook. “The confirmation of our rating will translate to the lowest cost of capital, permitting greater investment in the infrastructure that is essential to attracting new business and spurring job creation.”
Delaware’s Director of Bond Finance Stephanie Scola said the rating allows the state to enter the market with the lowest cost of capital.
The last credit rating for the state was in 2014. It has since exhausted those bonds and is ready to go the market with capital expenditures this year.