Michigan Wins 2nd "Gold Medal" with Another Wall Street Rating Upgrade to AaaContact:
John Truscott (517) 335-6397
Michigan today received its highest credit rating ever
from Moody's Investors
Service. Moody's upgraded the state to Aaa from
Aa1. It is the highest credit rating possible.
Moody's is the second Wall Street ratings agency to
take such action. Last week, Michigan became the 10th state in the nation
to join the elite ranks of being rated a "Triple A" state by a
Wall Street ratings firm when Standard & Poor's (S&P) upgraded
the state to AAA.
"I'm heartened by this second Aaa rating - our second 'gold
medal,'" said Governor John Engler. "We are extremely pleased
and proud that Moody's has recognized the many management and budget
control reforms implemented by my administration and the Michigan
Michigan has never previously received a Aaa rating
from Moody's and actually hit an all-time ratings low of Baa2 in 1982.
Since then, Michigan has received more upgrades to its bond rating from
Moody's than any other state.
The Aaa rating for the state lowers the cost of state and school
borrowing. In the years ahead, this will save millions of dollars for the
state and for Michigan schools in the form of lower interest rates. Moody's
cited the following reasons for the upgrade:
A rating upgrade, particularly to Aaa, results in lower interest costs.
For instance, the state will soon issue Environmental Quality of Life
bonds. Reduced interest costs on these bonds will free up funds for other
- Management and budget control changes that solidified well-established
trends in Michigan of a balanced budget, effective management and fiscal
- Strong executive control of significant financial resources, including
six consecutive years of strengthening the state 's budget stabilization
fund (Rainy Day Fund) and School Aid Fund and maintaining their high
levels; the ability to lapse spending; and the ability to delay multi-year
- A very low debt burden for a large, mature, industrialized state;
- A fully funded state pension system;
- A steady pace of economic growth and diversification;
- An economy that continues to add jobs while keeping unemployment rates
at historic lows;
- Well-established economic and financial trends that have also
accommodated significant tax cuts in recent years;
- An economy that is less exposed to economic downturns.
The Aaa upgrade was given to both the state's general obligation debt
and the school bond loan fund. It denotes that these bonds are judged to
be of the best quality, offering the smallest degree of investment risk.