Press Release|Public Finance
KBRA Assigns AA Rating, Stable Outlook to State of Louisiana General Obligation Bonds Series 2024-A and Refunding Series 2024-B; Affirms Rating for Parity Bonds
15 Mar 2024 | New York
KBRA assigns a long-term rating of AA with a Stable Outlook to the State of Louisiana General Obligation Bonds, Series 2024-A and General Obligation Refunding Bonds, Series 2024-B. Concurrently, KBRA affirms the AA long-term rating and Stable Outlook on parity General Obligation bonds outstanding.
Key Credit Considerations
The rating was affirmed because of the following key credit considerations:
Credit Positives
- Constitutional balanced budget requirement, coupled with statutory limitations on fund balance utilization for operations.
- Improving reserve and liquidity position, supported by revenues that proved resilient throughout the COVID-19 pandemic.
- Moderate leverage metrics, coupled with a formidable legal framework prioritizing debt repayment.
Credit Challenges
- Comparatively weak socioeconomic metrics relative to other U.S. States.
- Some exposure to commodity pricing volatility, given the employment and economic output concentration in chemical and petroleum production.
- Louisiana’s economy is exposed to volatility related to climate events, including hurricanes and coastal erosion.
Rating Sensitivities
For Upgrade
- Improvement in the state's socioeconomic metrics, notably personal incomes, could lead to upward rating migration over time.
- Improved pension funding status across the State’s seven funds.
For Downgrade
- A weakening of budgetary performance, reserves, or direct liquidity.
- The reversal of financial measures enacted to enhance budgetary stability.
To access rating and relevant documents, click here.