Two international bond rating firms recognize Washington’s economic performance
FOR IMMEDIATE RELEASE—July 2, 2008
OLYMPIA—Gov. Chris Gregoire today announced that Washington state earned a “AA” rating from Fitch Ratings and an “AA+” rating from Standard & Poors, two international bond rating firms. The rankings are among the highest that the two firms give for bonds.
“Building a solid economic base for the state is paying off,” Gregoire said. “It’s our job to invest taxpayer money wisely, hold state agencies accountable for results and keep a healthy reserve. This pays off as we enter the marketplace to sell bonds for construction and other capital projects. We earn a good value for the state when our high ratings help us get low interest rates.”
According to a statement released by Fitch, Washington’s ”AA” bond rating “is based on the state’s sound financial and debt policies and economic and financial strength.” The company outlined a number of positive indicators that drove the decision to assign the “AA” rating, including:
Nonfarm employment, which rose 3 percent in 2006, compared to the nation’s growth of 1.8 percent;
State employment, which rose 2.5 percent, compared to 1.1 percent for the nation;
Personal income growth, which has considerably exceeded national levels in 2006 and 2007, and remains ahead of both regional and national trends through the first quarter of 2008; and
State unemployment, which continues to trend below the national average.
In addition, Fitch points out that the 2005–07 biennium was the strongest for Washington since the 1989–1991 biennium, with revenue growth of 10.5 percent in fiscal 2006 and 8.4 percent in fiscal 2007.
“It’s notable that Fitch commented on our economy outperforming that of states across the country,” said Victor Moore, Office of Financial Management director. “We have made decisions to invest in programs that strengthen Washington’s economy so that our citizens and businesses can flourish.”
Standard & Poor’s rating reflects “the state’s very strong credit factors across a variety of fundamental economic and financial measures,” according to a statement released by the company. “Although signs of slowing economic growth are becoming evident in the state revenue forecasts, the state’s economy continues to outperform, or at least lag, the slowdown seen at the national level.”
Standard & Poor’s also notes that if Washington is entering an economic slowdown, “downside risks to its credit are at least partially mitigated by the fact that it does so from a position of relative financial strength” with its rainy day account.
The rainy day fund was promoted by Gregoire as a means to provide a layer of financial protection for the state as a hedge against a souring economy or financial emergency, such as that posed by 9/11.
“While 29 states are now confronting budget deficits, we in Washington are in a better position to ride out this economic storm,” Gregoire said. “It’s not just me pointing this out. The financial community agrees.”
The ratings were issued in advance of a sale of general obligation bonds scheduled July 9.
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Contact: Glenn Kuper, Office of Financial Management, 360-902-7607