BATON ROUGE – Late Wednesday, Standard & Poor’s raised its rating on Louisiana’s general obligation (GO) debt to AA from AA-minus, with a “stable” outlook, due to the state’s willingness to resolve structural issues in its budget. The move marks the first AA rating for Louisiana by S&P since 1984.
Governor Bobby Jindal said, “This is the first AA rating for Louisiana from S&P since 1984 and shows that the business world is taking note of our work to expand and diversify the state’s economy while pursuing reforms to make government more fiscally responsible.”
Better ratings, like higher credit scores, typically mean better borrowing terms that save the state money in interest costs. Earlier this year, Fitch Ratings reaffirmed Louisiana’s GO bond rating of “AA,” and the state’s GO bonds are rated Aa2 by Moody’s Investor Service.
S&P’s upgrade marks the sixth credit-rating upgrade among all three major credit-rating agencies that Louisiana has received since the start of the Jindal administration.
In a statement quoted by Reuters, S&P’s credit analyst cited Louisiana’s unemployment rate being below the national average, adding: “We expect the state to continue to address its structural challenges, such as its underfunded pension systems, and we anticipate that it will likely continue to make expenditure cuts as needed to ensure balanced operations.”