(The Center Square) – Oklahoma’s credit rating has improved amid economic growth, and there’s a chance its rating could go up again, according to a credit rating agency.
S&P Global Ratings, which uses independent analyses to determine creditworthiness, upgraded its outlook for Oklahoma from stable to positive, giving the state an “AA” long-term issuer credit rating. There are just two other ratings higher than AA.
The rating refers to the general obligation of debt a state has or the issuer credit rating if the state has no outstanding general obligation debt, according to S&P. The credit rating agency looks at government framework, financial management, economy, budgetary performance, and the state’s debt and liability profile to determine the rating.
“The outlook revision reflects our view that there is a one-in-three chance we could raise our rating on Oklahoma over the outlook horizon should the state continue to attract development that grows its economy, while also demonstrating a firm commitment to structurally balanced financial performance and sustaining reserves and liquidity at levels that we believe position the state to more readily respond to volatile swings within future budgets, particularly given that a higher proportion of the state’s economy and revenue base are tied to cyclical global energy markets compared to the national average,” said Thomas Zemetis, a credit analyst for S&P Global Ratings.
Not only did the state’s outlook improve, but S&P also revised its outlook from stable to positive for the Oklahoma Development Finance Authority’s and the Oklahoma Capitol Improvement Authority’s appropriation-backed debt outstanding.
The ODFA’s nearly $3.9 million master real property lease revenue bonds, series 2023A, issued for the Oklahoma State System of Higher Education, also received an AA long-term rating.
Sale proceeds from the bonds, which are issued by the legislature, are currently being used to finance capital enhanced and construction at state colleges and universities, according to State Treasurer Todd Russ.
He acknowledged the improved rating Tuesday, calling it a positive recognition of Oklahoma’s fiscally conservative practices.
“The recognition of Oklahoma’s improved financial condition is well-earned and can be attributed to state leaders’ commitment to keeping debt levels low, decreasing pension system liabilities and providing reserves for the Rainy Day Fund,” Russ said. “A better credit status should translate into reduced costs for public infrastructure projects.”
Russ invited the credit rating agency to visit Oklahoma earlier this year. S&P said Oklahoma’s efforts to diversify its economy contributed to its improved outlook.
This article First appeared in the center square