JACKSON — 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 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.
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