JACKSON, Miss. — The nation’s three major credit rating agencies are making a visit to Jackson this month to review Mississippi’s credit strength for this year’s general obligation bond issue.
The Mississippi Business Journal reports (http://bit.ly/2cfeg47 ) that the visit comes after Fitch Ratings Service recently downgraded the state’s existing general obligation and revenue bond debt. Moody’s put a “negative” outlook on the debt. The third agency, Standard & Poor’s, warned in June a rating drop could be on the horizon.
Ratings from the credit agencies help determine interest rates when the state borrows money, through bond sales to investors. A drop in a state’s credit rating raises interest costs, making it more expensive to borrow.
Mississippi’s general obligation bond issue for the current 2016-17 budget year is expected to be $562 million.
In S&P’s June warning to investors, the rating service said it is cautiously monitoring the impact of recent tax cuts.
State Treasurer Lynn Fitch said the rating agency also is closely assessing a budget maneuver that changed how the state allocates charges to state agencies and gives the general fund money historically used for other designated purposes.
In its Aug. 7 assessment that placed a “negative” outlook on the debt, Moody’s cited “ongoing revenue weakness and below-average economic growth,” noting the state’s growing reliance on a rainy day fund to keep state finances afloat.
Information from: Mississippi Business Journal, http://www.msbusiness.com