For Immediate Release - March 22, 2011

MOODY'S AND FITCH REAFFIRM COMMONWEALTH'S Aa1 AND AA+ GENERAL OLBIGATION BOND RATINGS

Ratings agencies cite Patrick-Murray Administration's effective financial management through economic downturn

BOSTON - Tuesday, March 22, 2011 - Governor Deval Patrick and Treasurer Steven Grossman today announced that Moody's Investors Service has reaffirmed the Commonwealth's general obligation bond ratings at Aa1 and Fitch Ratings has reaffirmed bond ratings at AA+, citing the Patrick-Murray Administration's effective fiscal management. Moody's cited a "stable" outlook, "reflecting improving revenues and efforts to regain structural budget balance," while Fitch said, "Massachusetts' 'AA+' rating reflects considerable economic resources and a record of prudent financial management."

"The rating agencies reaffirmation of the Commonwealth's strong bond rating is welcome news," said Governor Deval Patrick. "We have worked hard to make smart choices to be able to continue to make critical investments in our schools, roads and bridges, and housing to build a stronger, lasting recovery."

Moody's and Fitch reaffirmed the Aa1 and AA+ bond ratings respectively to $438 million of Massachusetts general obligation refunding and new money bonds. The announcements follow Standard and Poor's reaffirmation on Friday of the Commonwealth's bond ratings at AA. Last month it was announced that Standard & Poor's has revised the outlook to Positive from Stable on Massachusetts' general obligation parity bonds due to the Administration's strong fiscal management. The revision to a positive credit outlook suggests that Standard and Poor's will consider upgrading the Commonwealth's bond rating in the future.

"These ratings are just another confirmation that the Governor's strong fiscal management during these challenging economic times has worked," said Administration and Finance Secretary Jay Gonzalez. "We must continue to maintain or improve our high bond ratings by actively and responsibly managing our budget so we can continue to make critical investments in the Commonwealth's future."

"We are pleased that the rating agencies have reaffirmed Massachusetts' strong bond ratings at a time when finances in other states are facing increased scrutiny," said Treasurer Grossman. "This is a testament to the Commonwealth's willingness to face up to its fiscal responsibilities in a timely, comprehensive fashion. And it re-emphasizes the need to move ahead with pension reform and to make the state a national thought and practice leader in financial disclosures."

According to each rating agency the Commonwealth's credit strengths include:

  • Effective financial management during economic downturns, particularly a willingness to promptly identify and close budget gaps through both new revenues and expenditure reductions
  • Budget reserves that still provide an adequate cushion, although a reduced one, and a statutory mechanism to replenish them going forward
  • High wealth and high levels of educational attainment
  • The presence of large, highly-rated higher education and health care institutions in the Boston area has lent a degree of economic stability and have mitigated some job losses during recessions.

The Commonwealth has upheld an 'AA' bond rating on its General Obligation Bonds throughout the unprecedented global economic downturn. Rating agencies conduct independent assessments of the Commonwealth's creditworthiness based on relevant risk factors. The Commonwealth's ratings are based on its ability to repay fully the principal and interest of its short-term or long-term debt obligations, on a timely basis. For General Obligation bonds, ratings are based primarily on four main factors: the economy, the issuer's financial position, the issuer's current and future debt burden, and financial management.

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