La.’s general obligation bonds get ‘AA’ Fitch rating

Fitch Ratings has given an “AA” rating to roughly $608 million worth of general obligation refunding bonds expected to be sold later this month, the ratings agency announced today. In addition, Fitch affirmed an “AA” rating for $2.4 billion in outstanding GO bonds the state has, and an “AA-” rating for $507 million worth of appropriation-backed bonds. The ratings outlook on the bonds is stable, Fitch says. “Louisiana’s ‘AA’ GO rating reflects the sound financial management demonstrated by the state since the hurricanes of 2005 and through the recent recession, including a focus on spending control and maintenance of solid reserves,” the ratings report says. “However, financial operations continue to be affected by revenue shortfalls, and the state continues to employ one-time measures to close budget gaps. State debt levels remain moderate, while the funding levels for the state’s two largest pension systems are below average. There are strong legal provisions for GO debt, with all non-dedicated revenues flowing into the bond security and redemption fund to provide first for debt service. The rating also recognizes the state’s economic concentration in the volatile energy industry.” Read the full news release from Fitch here for more details on Louisiana’s credit profile.