WASHINGTON -- Moody's Investors Service raised Delaware's general obligation bond rating Friday to Aal from Aa, citing "continued sound financial management, substantial budget reserves, effective debt management, and resilient economy."

Gov. Thomas Carper said the rating from Moody's is the highest in the state's history and the first upgrade it has received in more than a decade. "With this upgrade, Delaware's bond rating is now among the 12 best in the nation," he said.

The move was made in connection with Delaware's sale tomorrow of $45 million of GO bonds. The upgrade also applies to $7 million of outstanding industrial development bonds issued by the state's Department of Community Affairs and Economic Development.

Standard & Poor's Corp. last Wednesday reaffirmed the state's AA-plus bond rating.

Moody's said Delaware has maintained a budget surplus that substantially exceeds the constitutionally mandated 5% reserve. General fund balances have exceeded 10% since 1987, the agency said.

The state continues to draw major revenues from the large number of businesses that are incorporated in Delaware but headquartered elsewhere, Moody's said. Another plus is that Delaware's revenues are less dependent on local economic conditions than those of most states, the agency said.

Delaware's debt burden remains high because of "the centralized role of the state government in undertaking capital projects," Moody's said. But the debt is "well structured, with declining debt service and rapid rate of retirement," the rating agency said.

Delaware's economy, which has been dominated by the chemical industry, is becoming more diversified, Moody's said. Employment is stable, and the state has the lowest percentage -- 7.2% -- of people with incomes below the poverty level.

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