Minnesota earns Moody’s AAA rating for first time in nearly 20 years – Detroit Lakes Tribune
ST. PAUL – For the first time since 2003, Moody’s has rated Minnesota as AAA, the highest rating achievable. In a separate statement, Standard & Poor’s (S&P) also confirmed its AAA rating for Minnesota.
Moody’s raised Minnesota’s rating from Aa1 to AAA. This corresponds to the rating established and maintained by Standard & Poor’s. Fitch recently rated Minnesota AAA in 2021 and will release its current rating soon.
“Minnesota is in a strong financial position,” Governor Tim Walz said in a press release. “To be outperformed by Moody’s is an incredible achievement at any time and particularly in the wake of a historic pandemic that has created uncertainty in the global market. Prudent fiscal management, a diversified economy, record unemployment and strong financial reserves place us on the threshold of what relatively few states have, AAA bond ratings in all areas.
Moody’s attributed its upgrade to “a track record of prudent governance that has resulted in growth in financial reserves and strong management of long-term liabilities, such as improved pension contributions, which will maintain leverage and Minnesota’s fixed cost charges among the lowest of any US state.”
The rating is also supported by “strong and long-standing economic fundamentals, including above-average incomes, a diverse industrial composition, high levels of labor force participation and low unemployment rates.”
“We all passed a stress test and we did well,” Minnesota Management and Budget Commissioner Jim Schowalter said. “Sound fiscal practices, smart financial investments, and moderate debt levels have helped put Minnesota on a solid footing to weather any national economic headwinds that come our way. Better overall bond ratings will help keep the cost of borrowing for future Minnesota investments as low as possible at a time of rising interest rates.
In affirming Minnesota’s AAA rating, Standard & Poor’s cited the state’s deep and diverse economy, history of strong financial results, moderate debt levels, and ability to grow revenues and reduce or defer spending to maintain a balanced state budget.