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Oregon Keeps Credit Rating

By Sally Maison
Published: Wednesday, November 4th, 2009

The three top credit rating agencies announced that Oregon has managed to keep its credit rating intact amidst economic crunch. The rating, which says the state can safely give out fund rating bonds, means millions dollars saved for its taxpayers.

Oregon Keeps Credit RatingMoody’s Investor Service, Fitch Group, and Standard & Poor’s all agreed that Oregon’s credit rating remains strong. The reaffirmation came last week after the three nationally recognized statistical rating organizations (NRSROs) finished reviewing the financial standing of Oregon. The state keeps Aa2, AA and AA rating from the companies respectively. The ratings are not the prime mark for bond buyers but its show that Oregon has a strong ability to maintain its solid financial standing. It likewise shows that the state is stable financially.

But state treasurer Ben Westlund warned that the Oregon’s present balanced budgeting could be overturned by ballot measures. This could easily overturn their present credit rating, he added.
Westlund explained that several states across the country have experienced a downgrade in their ratings while Oregon shows that it remains a safe credit risk.

Analysts said Moody’s did not change the credit rating of Oregon since it still has a strong fiscal policy, despite the fact that its state pension system incurred a 27-percent loss last year. Representatives from the financial agency noted its sound budgeting strategies as the primary reason for its stability.

Fitch said Oregon’s rating shows that it has a diversified economy which provides added stability. It also has managed to keep its debts at a moderate level. More importantly, state administrators have found a way not to rely too much on budget reserves despite the challenging economy.

On Oct. 30, Standard & Poor’s reported that the ballot measures could spur increased for personal and corporate taxes for couples earning more than $250,000. The rating agency said repealing recent increases in tax rates could destabilize the funds of a government unit which could easily lead to poor credit quality.

Analysts added that increased level of unemployment could also hurt a state’s credit rating since residents will find it difficult to meet their tax obligations.

To prepare for possible losses in the coming years, state administrators reported that they have already planned to cut spending on their 2009-11 budget plans. Officials said they remain confident on their standing despite seeing other states receive warnings from rating companies for a possible downgrade.

A state’s credit rating is like a consumer’s credit score, which determines the interest rate for every loan or credit transaction. Experts said millions of taxpayer money will be saved if Oregon officials manage to keep their economy and budget stable as the country fight its way to recovery.

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