NEW ORLEANS — On May 25, Moody’s Investors Service announced that it has upgraded Louisiana’s issuer rating to Aa2 from Aa3. According to Investopedia, Aa2 is the “third-highest long-term credit rating that Moody’s assigns to high-quality fixed-income securities with very low credit risk.”
Moody’s, a New York City-based credit rating agency, said the upgrade to Louisiana’s issuer rating “reflects the significant progress the state has made restoring its financial reserves and liquidity in recent years by structurally aligning revenue and spending, despite a generally declining trend and volatility in gas and oil production and unfavorable demographic trends.”
Gov. John Bel Edwards cheered the news from New York.
“Moody’s most recent upgrade is yet another step in the right direction for Louisiana’s financial outlook,” he said in a May 25 press release. “When I came into office, we were facing a huge fiscal cliff and unstable finances. By working together with the Legislature, we’ve been able to turn things around. We now have surpluses instead of deficits, we’re investing again in education and infrastructure and we are no longer relying on one-time money for recurring expenditures. Between the pandemic and natural disasters, nothing we have done over the past several years has been easy, but our commitment to strong financial management is paying dividends for Louisiana.”
Louisiana State Treasurer John M. Schroder is also a fan.
“This is a long-overdue upgrade for our state,” he said in a statement. “My five years serving as State Treasurer have seen five years of strong financial performance and significantly increased reserves.”
Schroder said that Louisiana has not missed a debt payment or otherwise defaulted in modern times.
“The upgrade will save us money in the future and is a reward to investors who believed in us all along,” Schroder said. “I cannot overstate how much confidence this brings to the state’s investors.”
Schroder said that for every $300 million in bonds issued, the higher rating from Moody’s will equate to about $750,000 annually in interest savings.
Click here to read Moody’s full release.
