May 17 (Bloomberg) -- Maine had the outlook on $498 million in general-obligation bonds lowered to negative from stable by Moody’s Investors Service on “challenges” related to Medicaid spending and a lack of reserves.
The company also affirmed the rating of Aa2, third-highest, on the debt and assigned the same to $55.8 million of general-obligation bonds the state plans to issue, Moody’s said today in a statement. Maine plans to issue the debt on May 31 for capital projects, Moody’s said.
Maine’s revenue performance is “tracking slightly over budget,” the company said, while the state’s unemployment rate of 7.2 percent is below the nation’s 8.1 percent.
The rating reflects the state’s “manageable debt levels; improving revenue performance; the resolution of recent budget shortfalls with largely recurring actions; and pension reforms that have improved the state’s funded ratios and lowered the annual required contribution,” Moody’s said. “Debt ratios are below the 50-state medians and debt is scheduled for rapid retirement within 10 years.”
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