Brewer Announces Upgrade in State’s Credit Rating

Standard & Poor’s Boost Rating to AA+

 (Boston) – Senator Stephen M. Brewer (D-Barre) announced today that the Commonwealth of Massachusetts has received a credit upgrading from Standard & Poor’s, one of the nation’s top three bond rating agencies.  The state’s rating has been boosted from AA to AA+, the state’s highest rating ever. 

The upgrade, which could save millions of dollars, comes in advance of next Wednesday’s planned sale of $475 million in general obligation bonds. The Commonwealth uses bond proceeds for infrastructure construction and capital investment throughout the State.

“Earlier this month, we met with the bond rating agencies and listened to what they had to say,” said Brewer, who chairs the Senate Committee on Ways and Means.  “We have worked hard and we have a long list of accomplishments that demonstrate our financial stability.  I believe the rating agencies listened to what we had to say.  This upgrading is a welcomed vote of confidence.  ”

Brewer joined legislative leaders on September 7 to meet with officials from the nation’s three bond rating agencies - Moody’s Investor Services, Fitch Ratings, and Standard & Poor’s - to outline the Commonwealth’s accomplishments and Massachusetts’ successful budgeting and improved fiscal health, in spite of the loss of $1.75 billion in federal funding this fiscal year. 

The credit rating upgrade comes just one day after the Senate voted to pass major reforms to the state pension system, including anti-salary-spiking provisions and the elimination of a controversial early retirement loophole. The Senate plan is projected to save the Commonwealth $5 billion over 30 years. This is the third consecutive year the Senate has passed significant pension reforms.

Last week, the Commonwealth also saw a drop in its unemployment rate to 7.4 percent.  This is a drop from 7.6 percent in July.  Massachusetts continues to have a jobless rate well below the national average. 

The AA+ rating means that the state has been bumped from a AA rating, to a AA with a positive outlook, meaning that the state’s bond rating has a likelihood of increasing in the coming year.  The AA rating is defined by Standard and Poor’s as: The obligor's capacity to meet its financial commitment on the obligation is very strong.  The higher credit rating means lowered borrowing costs and could reflect savings of taxpayer dollars in the future.  Massachusetts now sits just below AAA, the highest possible bond rating.

Last month, Standard and Poor’s lowered the Nation’s credit rating from AAA to AA+ saying that that the outlook on the long-term rating is negative.  The Commonwealth is now bracing for $917 billion in spending reductions as part of the $2.4 trillion in savings under the Budget Control Act of 2011.  The bill cuts the Federal FY2012 budget deficit by $21 billion and holds spending below FY2010 levels until FY2016.  The cuts will be a major factor as the state continues to manage their finances for the future.

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Posted: Mon, Sep 19, 2011
Updated Mon, Sep 19, 2011