Behind the Sound Bite: Bond Ratings
At a recent event at MetroWest Medical Center in Framingham, Gov. Deval Patrick celebrated news that an Israeli company, EarlySense, would open its American headquarters in the Bay State. Part of the reason, he said, is because of the state’s strong financial position, including the fact that Massachusetts is one of only three states to have a positive outlook on its general obligation bonds. Given all the recent talk about bond ratings, we explore that statement in this week’s Behind The Soundbite.
Is Massachusetts one of only three states in the nation with a positive outlook on bonds?
Yes, kind of. There are three major ratings agencies: Fitch, Moody’s and Standard & Poor’s. According to S&P ratings released in July, Massachusetts is one of only three states with a positive outlook on its general obligation bonds. But the other ratings agencies expect the Bay State’s bonds to remain stable in the near future.
How do the ratings compare with those of other states?
According to S&P, Massachusetts’ AA bond rating is the most common rating among states. Seventeen states have AA ratings, which is two notches below the top rating, AAA. Thirteen states have that top rating, while another 14 have AA+ ratings, which lies between the two ratings. S&P gave three states (Arizona, Illinois and Maine) negative outlooks, as did Fitch, while Moody’s rates seven states as having negative outlooks.
Which other states have positive outlooks?
According to S&P, Massachusetts is joined by Tennessee and North Dakota. Meanwhile, Fitch gave out only two positive ratings (Michigan and New York), while Moody’s didn’t have any positive outlooks.
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