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Monday, 15 June 2020 20:33

Despite COVID-19 Economic Shutdown, Florida Retains AAA Bond Rating

Written by John Haughey, The Center Square
Florida Chief Financial Officer Jimmy Patronis Florida Chief Financial Officer Jimmy Patronis Steve Cannon/AP

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Despite a potential $10 billion hole in its $92.3 billion fiscal year 2021 budget fostered by the COVID-19 economic shutdown, Florida’s conservative fiscal policies and robust economy will help it retain its AAA bond rating with at least two of the nation’s three top credit rating agencies.

Florida officials made their annual presentations to Moody’s Investor Services and Standard and Poor’s (S&P) in May, with emphasis on the economic, fiscal and budgetary effect of the COVID-19 emergency on the state’s overall credit rating and fiscal health.

 

Florida has an AAA or AA1 overall general bond rating from Moody’s, S&P and Fitch’s. The higher the rating, the less interest paid on bonds issued by the state, making them more attractive to investors.

 

Moody’s and S&P 2020 reports are not expected to be published until late June, but Florida Chief Financial Officer Jimmy Patronis announced June 11 that Florida got both agencies’ gold seal of credit worthiness.

 

“I’m encouraged by Moody’s and Standard & Poor’s analyses that Florida continues to maintain a Triple-A Bond rating and a stable economic outlook in the face of the COVID-19 pandemic,” Patronis said. “According to the agencies, Florida’s steady credit rating and strong financial position is a testament to sound fiscal management practices and healthy reserves. While encouraging, we must remain vigilant as hurricane season is here and experts are already predicting an active storm season.”

 

Last month, Moody’s warned investors this year’s hurricane season poses increased risks for state and local governments struggling to recover from the COVID-19 emergency.

 

“The disruption, property damage and costs of recovery from a natural disaster event in the coming months would compound governments’ coronavirus health and fiscal challenges,” Moody’s analyst Pisei Chea wrote in a report co-authored by five other analysts.

 

“We are not out of the woods yet,” Patronis said of Moody’s' hurricane warning.

 

Moody's issued a summary May 28 that said it had completed a review of Florida bond ratings after the state's annual presentation.

 

“Florida's AAA rating reflects its economic growth over the last decade, during which time the state prudently built up reserves and maintained a manageable debt and pension burden,” the summary read. “This results in a below-average annual fixed costs, affording the state additional financial flexibility to mitigate the state's above-average exposure to climate change generally, and storm damage costs, more specifically.”


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