Moody’s leaves Maine’s bond rating unchanged as spring sale nears

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PORTLAND (AP) – Gov. John Baldacci said Sunday he was pleased to learn that Moody’s Investors Service cited improvements in Maine’s fiscal position as it left the state’s general obligation bond rating unchanged.

Moody’s, which downgraded such bonds from Aa2 to Aa3 a year ago, said it will maintain its Aa3 rating this time.

“After several years of narrow financial operations, Maine’s fiscal position has improved as indicated by growing reserve levels reflecting management efforts to control spending and rebuild balances depleted during the recession,” Moody’s said in its new report.

“The outlook for Maine’s general obligation rating is stable at the Aa3 level reflecting Moody’s expectation that the state will manage its budget challenges and continue to improve its available fund balance levels,” Moody’s added.

Moody’s was one of three Wall Street ratings agencies that downgraded Maine last year. The other two, Standard & Poor’s and Fitch, have yet to issue new reports, Baldacci spokeswoman Crystal Canney said.

The creditworthiness ratings help determine the amount of interest the state must pay when it issues bonds to pay for various capital projects.

Maine plans to sell some $52 million of general obligation bonds next month, with the retail sale period set for June 2-5.

“The Aa3 rating and stable outlook indicates that Maine is fiscally sound. We expect to once again have a very strong bond sale in both the retail and institutional markets,” state Treasurer David Lemoine said.

The Moody’s report said Maine’s credit strengths included growing reserve balances, spending reductions, structural budget balance and low debt ratios. It also cited a better than expected outcome to last year’s base closure proceedings in which Portsmouth Naval Shipyard survived but Brunswick Naval Air Station got the ax.

Credit weaknesses, according to Moody’s, included the negative position of the general fund’s unreserved balance, narrow liquidity, slower job growth and the statewide referendum this November on a state spending limit called the Taxpayer Bill of Rights.

Baldacci’s announcement said Maine’s rainy day fund has grown from zero to $100 million in reserves during his administration.

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