It may seem harmless enough and far less-bad than the dire warnings of Meredith Whitney on a simple glance… Fitch Ratings is taking the downgrade warnings cycle closer to home now. The State of Washington’s general obligation bonds currently have a AA+ rating. Four different maturity bonds will be sold next week via competitive bids in the amount of roughly $1.5 billion.
Fitch affirmed the ‘AA+’ rating assigned to approximately $17.5 billion of outstanding state general obligation bonds. Unfortunately, Fitch has also revised the Rating Outlook on the state’s GO bonds to Negative from Stable.
One citation of the full research note:
The revision of the Rating Outlook to Negative from Stable reflects the challenges faced by the state in addressing a sizable budget gap that developed after the adoption of the current biennial budget. The state is operating in an environment of significantly constrained revenue raising and spending control flexibility. Maintenance of the ‘AA+’ rating will be contingent upon enactment of sustainable budgeting measures that provide an adequate cushion against future revenue underperformance.
Will this downgrade of the ‘outlook’ spread to other states?
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