Maryland Bond Ratings Remain Strong Amid Moody’s Downgrade
Two prominent Wall Street bond firms, S&P Global and Fitch Ratings, have affirmed Maryland’s AAA rating for its bonds, providing a counterbalance to Moody’s recent downgrade of the state’s creditworthiness. Despite Moody’s reducing Maryland’s rating from Aaa to Aa1 earlier this month, S&P and Fitch highlighted the state’s financial stability and prudent management practices.
S&P characterized Maryland’s bond outlook as stable, noting the state’s capability for timely fiscal adjustments to ensure a balanced budget and sufficient cash reserves. Fitch acknowledged that while it maintained the AAA rating, concerns exist regarding long-term liabilities and educational funding challenges.
In a unified statement, Maryland’s top Democratic leaders, including Governor Wes Moore and Treasurer Dereck Davis, expressed confidence in the state’s fiscal health amid ongoing federal economic challenges. They emphasized Maryland’s resilience in light of federal budget cuts and government layoffs, asserting their commitment to economic growth.
The state is grappling with a projected long-term budget imbalance, influenced significantly by the ambitious Blueprint for Maryland’s Future education initiative, which seeks to enhance public schools but faces funding gaps. Recent budget negotiations, initiated with a $3 billion deficit, concluded with a slight positive balance due to a mix of tax increases and spending cuts.
Criticism of the Moody’s downgrade emerged, with Davis directly challenging the agency’s analysis and insisting that Maryland’s bond repayment remains secure. This incident marks a notable shift for Maryland, which had enjoyed top ratings from all three major agencies for decades, underscoring the state’s ongoing fiscal challenges but resilient creditworthiness.
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