DELAWARE — Governor John Carney on Monday announced that Moody’s, S&P Global Ratings, and FitchRatings have reaffirmed the Delaware’s AAA rating, the highest rating available for any state.
The State of Delaware received competitive bids last week for its upcoming sale of $380 million of triple-A rated General Obligation Bonds. The State’s bonds carry the highest possible ratings assigned by the nation’s major rating services contributing to solid results for the State and Delaware’s taxpayers.
“Every Delaware taxpayer I’ve ever talked to expects us to spend their tax dollars in a responsible way – and rightly so,” said Governor John Carney. “I’m proud that the State continues to receive the highest marks for management of our finances. These triple-A ratings lower costs for taxpayers and sustain our ability to invest in new schools and other critical infrastructure. We’ll continue working hard, with our partners in the General Assembly, to protect taxpayer dollars.”
Ratings are assigned based on criteria that include the State’s financial performance and management, overall debt load, and approach to long-term issues ranging from financial obligations to economic development trends. The highest ratings, Aaa/AAA, are granted to states that are best managed and prepared to meet debt obligations during periods of recession or fiscal stress. The higher a state’s credit rating, the lower its cost to repay bonds.
“Despite selling into a dramatically higher interest rate environment than in recent memory, the bids we received were extraordinarily competitive,” said Secretary of Finance Rick Geisenberger. “While the Federal Reserve has raised its benchmark interest rate more than 4% since Delaware last issued bonds, the State’s total interest cost on its new bonds rose only a little more than 1%. And the State captured an additional $1 million in savings by refinancing $34 million of existing debt.”
All three rating reports related to the upcoming sale noted the importance of the State’s responsible budget practices and proactive approach to tracking and forecasting revenues and expenditures throughout the year.
FitchRatings stated that Delaware’s ratings are “supported by proactive management and institutionalized protections designed to ensure surplus operations”.
S&P’s report commented, “The State limits tax-supported debt…and adheres to clearly defined affordability parameters and rapid amortization.”
Moody’s reported a stable outlook for their rating, recognizing the “state’s strong reserves and structural governance features” as well as “lower business costs and cost of living relative to neighboring states…will help preserve a sound financial position relative to peers.”
“Strong financial management, which includes daily cash transactions conducted by our office as well as investment oversight from the Cash Management Policy Board, help secure Delaware’s fiscal health,” said Treasurer Colleen Davis. “We are committed to making sure current obligations are met while securing the state’s position well into the future.”
Proceeds of the sale will fund a portion of the State’s capital program as well as refund previous bonds in order to realize debt service savings. Closing on the sale and receipt of bond proceeds is scheduled for May 10, 2023.
Rating reports can be found at the Delaware Department of Finance’s website.