Michigan Debt Rating Raised to Third-Highest by Fitch
Michigan had its general-obligation debt raised one step to AA by Fitch Ratings, which cited the state’s economic rebound.
The move today affects $2 billion of securities that were graded AA- by Fitch. It gives the eighth-most populous U.S. state the New York-based company’s third-highest score. The outlook on Michigan debt was changed to stable from positive.
Separately, Standard & Poor’s revised its view of the state’s general-obligation bonds to positive from stable, also citing an improving economy in a report released today. S&P maintained its AA- rating for the debt. The change followed a similar move by Moody’s Investors Service on March 29.
“The upgrade is based on the state’s rebounding economic performance, including the improved competitive posture of the state’s auto industry after its restructuring,” Fitch analysts including Douglas Offerman said in a statement. Michigan “has used the economic and revenue momentum of the last two fiscal years to stabilize state finances,” including balanced budgets and increases in its reserves, the analysts said.
The AA rating applies to $200 million in general-obligation school-loan bonds that Fitch said the state plans to offer in a competitive sale on April 10.
Revenue and profit have risen at General Motors Co. (GM) and Chrysler Group LLC, controlled by Italy’s Fiat SpA (F), since bankruptcies and restructurings hobbled the industry. The big three U.S. automakers, including Ford Motor Co. (F), earned a combined $13.5 billion last year. The number of related jobs in Michigan has risen 34 percent from a January 2009 low, according to the Center for Automotive Research in Ann Arbor.
Michigan’s unemployment rate in February fell to 8.8 percent, the lowest since 2008, though above the 7.7 percent national average, according to data compiled by Bloomberg. The state jobless figure peaked at 14.2 percent in August 2009.
Fitch also raised some state revenue bonds and school- related securities to AA- from A+.
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