WASHINGTON -- Maryland county bond credits tend to be among the strongest in the nation despite the economic downturn that has sent revenues plunging, according to a report released last week by Moody's Investors Service in conjunction with a meeting of the Maryland Government Finance Officers Association.

"The distribution of all non-enhanced general obligation bond ratings for Maryland counties shows a significantly larger portion of issuers rated in the strongest Aaa and high quality Aa1 and Aa categories than is the case in the rest of the Mid-Atlantic region or the nation," the Moody's report, Municipal Focus on Maryland, says.

The Mid-Atlantic region includes Delaware, the District of Columbia, New Jersey, New York, Pennsylvania, and Maryland.

Moody's rates 43% of Maryland's counties at Aa or above, while 34% in the Mid-Atlantic region and only 18% nationally have such ratings.

Moreover, there are no municipal bond issuers in Maryland rated lower than Baa. That rating is the lowest investment grade rating available from Moody's.

In a further indication of the strength of Maryland bond ratings, the Moody's study notes that no Maryland county bond ratings have been downgraded within the past year. The agency downgraded 244 municipal ratings nationally and 51 in the Mid-Atlantic region between January 1990 and March 1991.

Moody's attributes Maryland's above-average credit history to strong administrative performance by county governments, good debt mangement practices, a strong socioeconomic base, and prudent financial management.

The report notes that governmental functions in Maryland are highly centralized, with almost all services provided directly by county governments. "The comprehensive scope of county operations has generally resulted in sophisticated financial monitoring and reporting systems," the report says.

But the cost of providing those services "provide a continual challenge for governmental managers.

"Overall, the relatively high ratings in the state suggest a willingness and ability to meet this challenge," the report continues. "Continued success in meeting service needs while facing financial pressures that have resulted from the current regional downturn, however, is of primary importance to future credit quality of bond issuers."

Maryland counties also draw high marks from Moody's for debt management. Though the average debt per capital for the major metroplitan area counties in the state is roughly $1,430, slightly above national medians, Moody's says the counties maintain "very manageable debt levels, given the affluence of taxpayers in the state."

The report also notes that because of the current economic slowdown, many counties are scaling back capital programs, debt issuance, and pay-as-you-go financing. The report says the move is "unlikely" to have a negative effect on local infrastructure.

County bond ratings also get a boost from strong income levels. Per capita income in the state, based on 1989 figures, places Maryland sixth highest in the nation. Coupled with "a relatively stable and diverse local employment base," the high income levels help to enhance municipal credits.

Moody's says "strong financial management" is a keystone in the counties' high bond ratings. Along with conservative budgeting practices, Moody's predicts the counties will be able to return to balanced financial operations soon, despite the uncertain economic times. But trouble could loom for those counties unable to adapt. "The failure to quickly and fully adjust fiscal priorities and return to a balanced financial structure ... may pose risks to future credit quality," the report says.

The report, dated June 1991, includes reviews of the counties of Anne Arundel, Baltimore, Charles, Frederick, Howard, Montgomery, Queen Anne's, Talbot, Worcester, and the city of Baltimore. Moody's says a more extensive report on all of Maryland's 23 counties will be published later this summer.

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