Governor Brian Kemp announced Monday that Georgia has again secured the highest ratings of AAA with a stable outlook from each of the three main credit rating agencies: FitchRatings, Moody’s Investors Service, and S&P Global Ratings.
Of the states that issue general obligation bonds, only nine currently meet this standard. Georgia’s upcoming sale of general obligation bonds will fund $754 million in capital projects and, if interest rates permit, also refund outstanding bonds to achieve debt service savings on a portion of the state’s outstanding debt. The majority of the bond proceeds will fund K-12 education, higher education, public safety, and economic development projects. The Peach State’s AAA ratings will enable the state to sell its bonds at the lowest possible interest costs when it takes bids for those bonds on June 22. The credit rating agencies’ individual ratings, which are AAA, Aaa, and AAA, respectively, are the highest ratings possible, and indicative of sound fiscal management.
“Securing the highest possible state bond ratings for yet another year is the result of decades of conservative state leadership and our balanced approach to protect both lives and livelihoods throughout the COVID-19 pandemic,” said Governor Kemp. “By keeping our state open for business we have brought in record levels of jobs and investments all throughout the state. Our approach – which continues to include working closely with the General Assembly – allowed us to pass both budgetary and legislative measures that cut taxes and put money back into the pockets of our citizens, put parents, students, and teachers first, invest in our workforce, support Georgia’s thriving economy, strengthen public safety, and create innovative solutions to our healthcare challenges. These decisions have resulted in a record-low state unemployment rate and record-high job and investment growth. Today’s news further underscores that the Peach State remains the best place to live, work, and raise a family.”
Fitch, Moody’s, and S&P cited the strength of Georgia’s economy with a positive employment trend, fully funding the state’s rainy day fund, a balanced approach to primary revenue sources, and consistent funding of obligations as factors contributing to AAA ratings.
Bond Rating Agency Report Excerpts
“Georgia’s ‘AAA’ Issuer Default Rating (IDR) reflects the state’s proven willingness and ability to maintain fiscal balance and a broad-based, growth-oriented economy that supports solid revenue growth over time. … Growth in population and jobs has outpaced the nation over several decades, driving steady economic gains and providing a solid foundation for future growth. … Georgia’s long-term liability burden is low, and overall debt management is conservative. The state issues bonds regularly for capital needs and principal amortization is rapid. Georgia fully funds its actuarially determined contributions (ADCs) for pensions supporting a modest net pension liability (NPL) burden. … The state is well positioned to deal with economic downturns with exceptionally strong gap-closing ability…”
Moody’s Investors Service:
“The Aaa issuer rating reflects the state’s large and diverse economy, population and employment growth that outpaces the nation, solid reserves and liquidity, strong fiscal governance and low direct leverage from debt, pension and OPEB liabilities. Very strong revenue performance year-to-date in fiscal 2022 will fund the state’s recently enacted tax cuts – including a gas tax holiday, one-time rebates and permanent cuts to income tax rates – with limited impact on financial reserves. … The outlook is stable as the state will likely maintain its solid reserves and continue outpacing the nation in economic growth while long-term leverage will not significantly change in coming years.”
S&P Global Ratings:
“Georgia’s ‘AAA’ long-term rating is supported by our view of its overall strong credit fundamentals, including its large and diverse economic base that has benefited from sustained population growth and ongoing economic development efforts that have attracted considerable investment. … Georgia’s rating is also supported by our view of a strong governmental framework that supports its ability [to] control its expenditures and manage its liquidity. … Georgia has demonstrated responsive financial management that has enabled timely adjustments to general fund appropriations, and has yielded resilient budgetary performance and quick rebuilding of reserve balances in its revenue shortfall reserve (RSR). … The stable outlook incorporates our expectation that Georgia will maintain its strong financial position and will preserve balances in its RSR at or near its statutory maximum in the near term. … We consider Georgia’s financial management practices strong, which indicates practices are well embedded and likely sustainable. … The state’s debt burden is low-to-moderate, and it should remain so despite future debt plans and the potential for additional borrowings over the near- to medium-term. … Georgia maintains it commitment to adequately funding its pension liabilities and in recent years the state started to prefund its other postemployment benefits (OPEB) obligations.”