Moody's affirms aaa on new mexico's go bonds; outlook stable
Source: FxWire Pro - Ratings / 23 Mar 2016 19:16:29 America/New_York
Moody's has affirmed the Aaa rating on the State of New Mexico's $389 million outstanding general obligation bonds. At this time we have also affirmed the Aa1 rating on the state's Lease Appropriation Bonds (Fort Bayard Project) Series 2008, issued through Grant County and currently outstanding in the amount of $56 million.
The Aaa rating on New Mexico's general obligation bonds reflects the state's conservative financial management practices and strong general fund financial performance, most particularly the maintenance of relatively stable and adequate reserves even in the face of a significant decline in revenues derived from oil and gas production. The state's GO bonds represent only a small portion of its net tax-supported debt and benefit from particularly strong security provisions. Pension liabilities, while notable, are comparable to the medians for US states and for Aaa-rated states. The state has also made significant progress in addressing past weaknesses in its financial reporting, including the resolution of cash reconciliation issues. This resolution permitted the release of a $100 million special reserve the state established to cover any required adjustments arising from the cash reconciliation issues. Balanced against these strengths are below-average wealth levels and the need for continued improvement in financial reporting.
The rating outlook for the state's general obligation bonds is stable, reflecting the expectation that the state will maintain relatively stable reserves despite the volatility of its economy.
Factors that Could Lead to an Upgrade
Factors that Could Lead to a Downgrade
A significant and sustained reduction in available financial reserves.
Deterioration in unemployment rates or other economic indicators due to employment declines in sectors beyond oil and gas.
Failure to continue to make planned improvements in financial reporting practices.
New Mexico's general obligation bonds are secured by the full faith and credit of the state and specifically secured by and paid from a statewide property tax levy without limit as to rate. The treasurer is required to keep the property tax proceeds separate from all other funds. The payment of general obligation bonds from other than ad valorem taxes collected for that purpose requires an appropriation by the legislature. If at any point there is not a sufficient amount of money from ad valorem taxes to make a required payment of principal of or interest on state general obligation bonds, the governor may call a special session of the legislature in order to secure an appropriation of money sufficient to make the required payment.
Use of Proceeds
New Mexico is the 36th-largest state by population, at 2.1 million. Its state gross domestic product, $92.2 billion, is the 37th-largest. The state's wealth levels are below average, with per capita personal income equal to 81.5% of the US level and a poverty rate among the highest for US states.© FxWire Pro 2019. All rights reserved. The FxWire Pro content received through this service is the intellectual property of FxWire Pro or its third party suppliers. Republication or redistribution of content provided by FxWire Pro is expressly prohibited without the prior written consent of FxWire Pro, except for personal and non-commercial use. Neither FxWire Pro nor its third party suppliers shall be liable for any errors, omissions or delays in content, or for any actions taken in reliance thereon.