State of Tennessee Press Release; April 27, 2010:
Upgrades Confirm Confidence In State’s Financial Management and Outlook
NASHVILLE – Governor Phil Bredesen today announced that two national ratings services have recently returned Tennessee’s bond rating to the highest available level. Moody’s Investors Services has raised Tennessee’s rating from Aa1 to Aaa. The action comes on the heels of a recent step by Fitch Ratings to adjust the state’s rating from AA+ to AAA.
Tennessee is not alone in ratings upgrades by Moody’s and Fitch. The agencies have been recalibrating state and municipal debt ratings across the nation to bring them in line with ratings in other sectors.
“While the agencies are adjusting their ratings for states, they have clearly indicated continued confidence in Tennessee’s financial management,” Bredesen said. “We’ve worked hard over the past seven years to rebuild the rating agencies’ confidence, having dealt with the economic recession by living within our means and preserving our savings. It’s good to see that sound financial management and public stewardship rewarded.”
The action comes after recent reviews of the administration’s efforts to maintain short- and long-term stability as a result of the downturn in revenues that began in January 2008.
Returning the state’s credit rating to triple-A status was one of Bredesen’s goals when he took office. When Bredesen became Governor in 2003, Standard & Poor’s rating for the state was AA; by August 2006, S&P upgraded the rating to AA+ based on the state’s continually improving financial position.
Before Bredesen took office, the state’s rating from Moody’s was downgraded to Aa2 with a negative credit outlook. In less than two years, the outlook was upgraded to stable; by 2007, Moody’s upgraded the state’s rating to Aa1.
According to U.S. statistics, Tennessee continues to be among states with the lowest amount of debt in the nation. The higher bond rating means lower interest rates on borrowing.