Tennessee Retains its AAA Bond Rating

Moody’s and Fitch reaffirmed their AAA ratings for Tennessee.

The Tennessean Newspaper reports that:

“Two of the agencies that rate government bonds have reaffirmed their AAA ratings for Tennessee…Moody’s Investors Service and Fitch Inc. have decided they will leave the state’s rating at the highest level, a senior aide to state Comptroller Justin Wilson said in an email to lawmakers sent Monday [October 3, 2011] afternoon.”

Tennessee Gov. Bill Haslam lauded the bond rating:

"Tennessee Retains its AAA Bond Rating agencies for maintaining the state’s solid credit ratings, a testament to Tennessee’s leadership and conservative fiscal management."

These ratings allow the state to pay lower interest rates when it borrows money. Tennessee has one of the lowest debt burdens of any state in the country, a fact that is a strong positive in the evaluation process.

The Tennessee Constitution requires the state to balance its budget every year, and any capital project must be funded at 11 percent of its cost in the first year. The governor emphasized these structural decisions in state government are important indicators of stability and prudent management.

While Tennessee enjoys a AAA rating, Moody’s rates other states like Florida, Ohio, Pennsylvania and Massachusetts at Aa1, New York, Connecticut, Michigan and Nevada are rated Aa2, New Jersey and Arizona are rated Aa3 and Illinois and California are rated A1.