S&P Affirms Maine Bond Rating and Stable Outlook

June 6, 2014

For Immediate Release: Friday, June 06, 2014
Contact: Adrienne Bennett, Press Secretary, (207) 287-2531
Jennifer M. Smith, DAFS, (207) 624-7800

AUGUSTA – Standard & Poor’s Ratings Services has assigned their “AA” long-term rating and a stable outlook to Maine’s 2014 A and B general obligation bonds and has affirmed its “AA” rating and stable outlook on the state’s GO debt outstanding.

“I am pleased that S&P has affirmed our rating and has recognized—as did Moody’s—the efforts our administration has made to reform Maine’s public pension system, to pay $490 million in welfare debt to our hospitals and the reigning in of our welfare spending,” said Governor Paul R. LePage. “These significant accomplishments have improved the financial stability of the state. Just as important, S&P notes our continually improving unemployment rate, which in April was below the national level again in April at 5.7%.”

S&P states that Maine’s rapid debt amortization and access to a large cash pool were considered strengths in the rating. It cites repayment of hospital debt and substantial pension reforms as improvements that offset the accumulated general fund deficits and unfunded pension ratios on the state’s balance sheets. It also notes the effort to control costs in the Medicaid (MaineCare) program, including reductions in income levels for eligibility and the elimination of coverage for childless adults.

“Today’s rating by S&P reinforces what Moody’s Investors Service reported yesterday,” said DAFS Acting Commissioner Richard Rosen. “Our responsible revenue forecasting model has allowed Maine to avoid the budget shortfalls and subsequent rating downgrades that have troubled other states.”

The S&P rating comes on the heels of yesterday’s rating from Moody’s Investor Services. Moody’s affirmed their ‘Aa2” rating of Maine’s GO debt, while improving their outlook on Maine’s debt from negative to stable.

S&P identified some areas of concern that could pressure the state’s credit rating over the next two years. Those include continued budget challenges, particularly with Medicaid spending, a slow economic recovery and minimal levels in the state’s rainy day fund.