Moody’s Upgrades South Dakota Bonds
PIERRE, S.D. – Gov. Dennis Daugaard announced today that Moody’s has upgraded South Dakota’s lease-revenue bonds. The bonds issued through the South Dakota Building Authority and Vocational Education program within the South Dakota Health Education Facilities Authority have been awarded a Aa1 rating, an improvement over the previous rate of Aa2.
“This upgrade is the highest rating South Dakota can receive from Moody’s. It is the equivalent of the AAA we received from S&P last spring,” said Gov. Daugaard. “We’ve worked hard to place our state on a firm financial footing, and that stewardship has paid dividends.”
In their release of the rating, Moody’s attributed the upgrade to South Dakota’s “conservative fiscal practice, low fixed costs and a stable and healthy economy.”
The ratings agency applauded the state’s recent record of structurally balancing the budget and having high reserve levels, low debt, and zero pension liability. South Dakota’s newly adopted practices of issuing a debt affordability report, long-term financial plan and capital expenditure plan also contributed to the upgrade.
Credit ratings give potential bond purchasers a measurement of state performance and credit worthiness. Upgrades typically allow issued bonds to carry a lower interest rate, providing interest savings to issuers like the Building Authority.
“These types of upgrades demonstrate our state’s exceptional credit worthiness to financial markets. This leads to substantial savings in future interest payments,” Gov. Daugaard said.
To read Moody’s credit opinion for South Dakota, go to bfm.sd.gov/econ/MoodysFullReport.pdf