Delaware’s Triple-A Bond Ratings Reaffirmed

Refunding transaction helps address the State’s budget challenges

WILMINGTON, Del. – The State of Delaware today announced the successful refunding of $33 million of debt at a record low Total Interest Cost of 0.79%. The transaction will save the State $5.2 million in debt service on a net present value basis over the next decade and is structured to further help the State address the Fiscal Year 2021 budget challenges brought on by the COVID-19 emergency.

Three bond rating agencies reaffirmed Delaware’s Triple A rating – Fitch, Moody’s and KRBA – with each taking note of the work of Governor John Carney and the Delaware General Assembly in recent years to boost reserves to prepare for economic downturns. J.P. Morgan Securities LLC served as senior managing underwriter for the transaction.

View rating agencies’ credit reports.

“Delaware continues to receive high marks for fiscal management which allows us to sustain the important investments we’ve made in our schools, our communities and our economy, including efforts to address the impacts of COVID-19,” said Governor John Carney. “The COVID-19 emergency presents enormous financial challenges for every state including Delaware. But I think all Delawareans can be proud of the work we’ve done with the General Assembly to boost the State’s finances prior to this unanticipated event, so our State is better prepared to weather the storm.” 

“This successful transaction shows the market’s confidence in Delaware despite the near-term challenges faced by every state,” said Secretary of Finance Rick Geisenberger. “The competitive pricing and debt service savings achieved for Delaware’s taxpayers speak volumes about our State’s continuing financial strengths.”

“The reaffirmation of the State’s Triple-A bond rating is a huge vote of confidence during these uncertain economic times,” said State Treasurer Colleen Davis. “The State’s best practices including using one-time revenue for one-time expenses, and increasing our reserves, will go a long way to see that we emerge from this crisis maintaining our economic strength.”

KRBA views the financial position of the State as “very strong based on its conservative budgeting policies, comprehensive and timely process of revenue estimation, high levels of financial reserves and strong liquidity. In response to the economic impacts of pandemic, the State has constrained its FY2020 spending and projected expenditures are under budget.”

Moody’s noted that “Delaware’s Aaa rating is supported by its healthy and stable finances and its strong management and governance, all of which enhance the state’s capacity to weather the economic downturn caused by the coronavirus outbreak. The state’s recent growth in reserves provide a cushion in the currently challenged economic environment brought on by the coronavirus pandemic.”

Fitch also noted that “Delaware’s history of exceptional financial resilience and strong budget management may be tested by the depth and duration of this downturn. However, Delaware’s close tracking of both revenues and expenditures and frequent revenue forecasts updates have historically allowed it to quickly respond to changing economic conditions. Fitch anticipates the state will take appropriate action to maintain balance.” 

###


Delaware Receives High Marks for Fiscal Responsibility

Delaware Receives AAA Bond Rating

All three major credit rating agencies award Delaware with ‘AAA’ bond rating

WILMINGTON, Del. – All three major credit rating agencies have once again awarded Delaware with a ‘AAA’ rating, citing the state’s ongoing commitment to strong fiscal management. With this endorsement, Moody’s Investors Service, Fitch Ratings, and Standard & Poor’s Global Ratings have favorably acknowledged the current administration’s efforts to balance the state’s budget, make difficult cost cutting decisions, and develop new ways to raise revenue.

“Delawareans expect us to responsibly manage taxpayer dollars, and these ratings reaffirm that we are committed to doing just that,” said Governor John Carney. “We remain focused on building a sustainable financial plan, operating efficiently, and making important investments in education, our economy, and other services that make Delaware an even better place to live, work, and raise a family.”

The ratings agencies noted that Delaware has a strong government framework and provides frequent updates to revenue forecasts. This sets the stage for the state’s ability to proactively manage its budget, and respond to fluctuations in the economy – resulting in what they referred to as the state’s exceptional financial resilience.

Delaware officials worked quickly with financial advisors and bankers over the last two weeks to respond to proposed tax policy changes under consideration by Congress. The State disclosed, structured, marketed and closed $115 million of advance refunding bonds in record time, ensuring that state taxpayers did not miss out on a $4.7 million savings opportunity created by this refinancing.

“Positive credit ratings ultimately translate into long-term savings for Delawareans,” said Rick Geisenberger, Secretary of the Delaware Department of Finance. “In this case, our ability to move quickly to adapt to rapidly changing market conditions will also create near-term savings that will free up funds to invest in growing our economy and improving the lives of Delaware citizens.”

 

###


Fiscal Responsibility Earns Delaware a Universal Triple-A Credit Rating

Rating agencies express confidence in Delaware’s financial management

WILMINGTON, Del. – The three major rating agencies have once again awarded Delaware a Triple-A credit rating, the highest mark that a state can achieve.

Delaware has earned the Triple-A rating for 17 years, and the rating agencies continue to express confidence in Delaware’s strong financial management and its ability to effectively address budget challenges.

“Delawareans expect us to responsibly manage the state’s finances, protect taxpayer dollars, and make smart investments on behalf of the people of our state. These ratings re-affirm our commitment to those principles,” said Governor John Carney.

“It’s no secret that we face budget challenges. But we are committed to working toward a sustainable, long-term solution that allows us to focus on improving our schools, protecting our environment and ensuring that Delaware remains a competitive place for businesses to create good jobs.”

Moody’s Investors Service, Fitch Ratings, and Standard & Poor’s Rating Services continue to recognize the state’s strong fiscal practices and, in doing so, cited the state’s proactive management style, strong financial operations, and history of maintaining ample budgetary reserves.

“We expect Delaware’s long history of what we view as prudent fiscal management to continue as the state maneuvers through near-term budgetary challenges and mounting long-term liabilities,” Standard & Poor’s Rating Services said in its report.

The ratings were released as the state prepares to take bids on $225 million in general obligation bonds on Thursday, February 23. The bonds will be sold to fund state objectives – including improvements to schools, libraries, and other state facilities.

A Triple-A rating will allow the state to fund these projects at the lowest possible interest rates.

“Delaware has established solid, conservative principles for sound financial management,” said Finance Secretary Rick Geisenberger. “We remain committed to making financial decisions that protect the interests of our residents, businesses and taxpayers.”

###


Delaware Earns Universal Triple-A Credit Rating

Delaware has received a triple-A credit rating from all three major rating agencies – the highest mark a government agency can achieve. Highlighting the state’s fiscally responsible approach, Moody’s Investors Service, Fitch Ratings, and Standard & Poor’s Rating Services have recognized the state’s strong fiscal practices, as well as the strength of Delaware’s economy and labor market.

“These reports affirm our progress in strengthening Delaware’s economy, while budgeting responsibly,” said Governor Jack Markell. “Recognition of Delaware as one of the top rated states shows Delaware is well-positioned for continued success. However, our work is never finished. We must continue efforts to prepare our workers with the skills they need to compete for jobs, foster a nurturing environment for businesses to start and expand in the state, and ensure our budget is sustainable for years to come.”

The reports take into account expected workforce reductions in the first quarter of 2016 due to the DuPont merger with Dow Chemical, but cite positive trends and continued growth in other employment areas – including business services, financial activities, education, health, leisure and hospitality.

In its analysis, Standard and Poor’s pointed to Delaware’s “diverse economy,” “strong financial and budget management,” “consistently strong general fund reserves,” “moderate overall debt burden,” and “well-funded pension system.”

Delaware has now earned the top rating from all agencies for the past 16 years, including through the recent economic recession and ongoing recovery.

“Delaware has maintained its triple-A ratings through some challenging economic cycles – in large measure due to our disciplined adherence to responsible fiscal practices and focus on economic development,” said Secretary of Finance Thomas J. Cook. “Even through the Great Recession, this administration has maintained the highest possible credit ratings through strong financial management and fiscal discipline, while improving our business climate. The confirmation of our rating will translate to the lowest cost of capital, permitting greater investment in the essential infrastructure that is essential to attracting new business and spurring job creation.”

###

Leslie A. Poland
Public Information Officer
Delaware Department of Finance
(302) 577-8522
leslie.poland@delaware.gov