Fitch Ratings has upgraded Louisiana’s general obligation bond rating from AA-minus to AA, potentially allowing the state to borrow at lower interest rates and reduce costs for taxpayers, The Center Square reports.
The rating agency cited revenue policy changes implemented in 2024 that narrowed a projected structural budget gap, along with solid budget performance and continued financial flexibility. However, the Louisiana Department of Treasury has not estimated potential savings, which would depend on market conditions, bond structures and other financing factors.
Louisiana had approximately $3.5 billion in outstanding general obligation bond principal as of May 1, with another $1.3 billion in interest payments remaining over the repayment periods. The State Bond Commission projected about $414 million in general obligation debt service for fiscal 2027, including principal and interest.
The state also sold $348.7 million in general obligation bonds in April, before the upgrade, and commission materials in October included a request for $55.6 million in additional bond authorization for capital projects. The timing and terms of future borrowing following the upgrade remain uncertain.
State Treasurer John Fleming welcomed the improved rating, calling it an affirmation of responsible fiscal management and a positive signal of Louisiana’s creditworthiness. He said maintaining the improvement will require continued budget discipline and prudent oversight of public funds.
Fitch also upgraded certain bonds backed by annual legislative appropriations from A-plus to AA-minus. Despite the stronger credit profile, the agency identified challenges including slow economic growth, potential federal policy changes, spending pressures and adjustments to the state’s revenue structure.
