The outlook for Michigan’s general-obligation debt rating was changed from stable to positive by Moody’s Investors Service, citing the state’s progress toward stabilizing its budget.
Moody’s assigned the state’s Aa2 rating, the agency’s third highest category, to the planned sale of $200 million in bonds. The change in outlook on $5.1 billion of debt indicates the credit score may be in line for a raise.
The revision “reflects Michigan’s progress in rebuilding financial reserves and running structurally balanced budgets, which signals an improving credit trajectory,” Moody’s said Wednesday in a report. After the auto industry’s crisis in 2009, “Michigan is rebuilding its balance sheet.”
Revenue and profit have risen at General Motors, Ford and Chrysler since bankruptcy and restructuring hobbled the industry. The Detroit Three earned a combined $13.5 billion last year. Auto-related jobs in Michigan have increased 34% since their January 2009 low, according to the Center for Automotive Research in Ann Arbor.
Michigan’s unemployment rate in January was 8.9%, compared with a national rate of 7.9%, according to government data compiled by Bloomberg.
The change in outlook by Moody’s shows confidence in Gov. Rick Snyder’s willingness to tackle such issues as reducing retiree health-care liabilities by more than $5 billion and balancing the budget, state Treasurer Andy Dillon said Wednesday.
“It’s just good financial management, and the state’s being rewarded for that,” Dillon told Mark Crumpton on Bloomberg TV’s “Bottom Line.”
Chris Christoff, Detroit Free Press, Via Bloomberg News
