For Immediate Release - September 21, 2011

With Improved Standard and Poor's Credit Rating, State Poised to Save Millions in Bond Sale

S&P's Upgrade will Translate into Tens of Millions of Savings to the Commonwealth

State officials announced that today's sale of $500 million worth of bonds to primarily fund capital projects across Massachusetts will benefit substantially from Standard and Poor's decision last week to upgrade the Commonwealth's bond rating to AA+ from AA. The state presently has ratings of Aa1 from Moody's and AA+ from Fitch, and taken together, this set of ratings now gives Massachusetts its highest credit standing in history.

"Standard and Poor's has recognized that the Commonwealth is a good investment and, frankly, we've earned it," said Governor Deval Patrick. "Working together with the Treasurer and the Legislature, we've managed the budget well through these tough times, and this upgrade rewards that by making our critical investments in our schools, roads and bridges, and housing more affordable. We have shown that you can still invest in our future while balancing the books, and that doing both is the best way to better times."

"Standard and Poor's sent a strong vote of confidence last week in the management of the state's fiscal affairs, and we are already reaping the benefits of that confidence," said Treasurer Steven Grossman. "The savings to taxpayers associated with this bond sale will not happen by accident. They will be the direct result of a commitment to financial discipline, of making tough, responsible budgetary choices, and of state leaders working shoulder-to-shoulder to put the Commonwealth in the best fiscal position possible."

State general obligation ratings are based on four main factors: the state's economy, its financial position, its debt and financial management, and its long-term liabilities. Two weeks ago, Governor Patrick, Treasurer Grossman, Administration and Finance Secretary Jay Gonzalez, Senate President Therese Murray, House Speaker Robert A. DeLeo, and other top state fiscal managers hosted meetings with the country's three credit rating agencies. This was the first time that all three agencies were invited to a day-long series of presentations on the financial status of the state, giving state leaders a unique opportunity to highlight the strong fiscal position of the Commonwealth, as well as the collaborative and disciplined efforts that have led to that position.

"The S&P's upgrade indicates that Massachusetts continues to do better than most of the nation," Senate President Therese Murray (D-Plymouth) said. "It is the direct result of our commitment to reform, our encouragement of new industry, our preservation of the rainy day fund, and our ability to reduce spending over the years to produce responsible, balanced budgets during a difficult recession. We will continue to lead by example and build a secure foundation for future growth and prosperity."

"The savings our state will realize as a result of our upgraded bond-rating reflects our joint commitment to work together," House Speaker Robert A. DeLeo said. "Coming during the worst economic downturn since the Great Depression, this recognition demonstrates the teamwork and sound fiscal management of the leaders of our state."

Despite an environment where credit rating agencies are generally taking a cautious approach toward upgrades, a succinct case was made at the meetings for why legislative consensus on recent initiatives such as municipal health care reform, pension reform, and the push to bring the state's "Rainy Day" reserve fund to over $1 billion all demonstrate the responsible fiscal approach that should lead to a credit rating improvement.

State officials also noted that the Commonwealth's improved Standard and Poor's bond rating will also improve the borrowing costs for a number of Massachusetts authorities and cities and towns that rely on some form of Commonwealth support. For example, the UMass Building Authority, MassDevelopment, MassDOT, and the MBTA all have bond programs that rely on a Commonwealth guarantee. In addition, 41 cities, towns, and school districts have borrowed through the State Qualified Bond Program, allowing local entities to borrow under a rating tied into the state rating.

The Commonwealth has not received a credit rating upgrade from any of the three rating agencies since 2005. In February of 2011, Standard and Poor's changed the state's credit outlook to positive following a review of Governor Patrick's budget proposal.