BOSTON Massachusetts got its second dosesof good news in as many days yesterday when Standard & Poor's Corp; raised the outlook on the state's bond rating to positive from stable.
At the same time, the rating agency affirmed the state's A-plus rating, affecting $6.7 billion of outstanding general obligation bonds.
The improved outlook for the bonds comes as the state prepares to sell $200 million of GOs this morning through a competitive sale.
Standard & Poor's also assigned an A-plus rating to $25 million of Massachusetts Government Land Bank taxable bonds scheduled to be sold today.
The improved rating outlook also affects about $2.1 billion in associated government debt from other issuers, including the Massachusetts Bay Transportation Authority, Convention Center Authority, and Stele College Building Authority.
The announcement from Standard & Poor's came only one day after Moody's Investors Service upgraded the state's debt to A1 from A. Fitch Investors Service rates the state's debt at A-plus.
Although the state's rating is still below the national average for state credits, "everything seems to be going in the right direction for the commonwealth's finances," said Richard Larkin, a managing director at Standard & Poor's. "The change in outlook suggests that we feel it is likely that the state is moving more towardsthe rest of the nation."
During the national recession in the late 1980s and early 1990s, the state's finances suffered more than most. Because of the problems, and the political wrangling that resulted from it, the state was the lowest rated in the nation.
At the start of 1992, Massachusetts was rated BBB by Standard & Poor's, Baa by Moody's, and A by Fitch.
Standard & Poor's said it appears that the recovery that has helped the state overthe-past two years shows no signs of stopping, despite a continued slowdown in defense, durable manufacturing, and health care.
Larkin warned, however, that the state must be careful to avoid the problems of the past if it wishes to take the next ratings jump.
"Slipping back to the days of noncommunication between the administration and the legislature would be something we are watching," he said. "But the debt burdan is also a major concern."
Larkin said that the state's $6.5 billion in outstanding debt represents one of the highest state debt burdens per capita in the nation
The debt burden, though, becomes less of a concern for the rating agency if the state shows continued growth and good financial management, he said.
Standard & Poor's told the state that there are still many capital projects that will require borrowing, including the continued cleanup of the Boston Harbor and the Central Artery/Third Harbor Tunnel. In addition, the rating agency said that state money may be needed to fund a proposed convention center known as the Megaplex.
Larkin said that the state seems to be on the right track in getting the debt burden lowered. He said some of the credit goes to Gov. William E Weld and state Treasurer Joseph D. Malone, both of whom were reelected to second terms last week.
"Obviously, we are all very pleased this has happened and look forward to our next term," said Thomas Trimarco, first deputy treasurer for the state. "We hope that during this next term we can take the next step and receive the double-A status from the ratings agencies."
Apart from the restraint that Massachusetts will have to show in its borrowing, Standard & Poor's said that the state must work to reduce the pension fund's unfunded liability of $9.6 billion.