Rating Agencies Wary About Nevada

CARSON CITY, Nev. (AP) - Nevada kept its AA+ tax-exempt bond rating when it issued bonds earlier this year, but rating agencies are wary about the state of the state's economy.

Moody's Investors Service says it has negative outlooks on several states, including Nevada, and sees deterioration in the financial strength of other states.

"While budget gaps opened first in states where once hot housing markets had cooled, such as Arizona, California, Florida, Nevada and Virginia, the broader economy has since weakened substantially and the financial distress is more widespread," Moody's said in a report Tuesday.

Several states, including Nevada, plan to use reserves in the coming months, the report said, adding that reliance on those funds "in the short term may magnify the severity of the longer-term budget cuts."

Moody's and Fitch Ratings put Nevada on negative outlook in May. But state Treasurer Kate Marshall said the negative outlook didn't stop the state from having a strong response to its last general obligation bond issues in July. Nevada sold $305 million in general obligation, tax-exempt bonds with average maturity of 20 years and what she called "a very competitive" 4.5 percent rate.

Despite the negative outlook, Nevada still enjoys a AA+ bond rating or the equivalent from Standard & Poor's, Moody's and Fitch, she said. That's one notch below the top AAA rating.

(Copyright 2008 by The Associated Press. All Rights Reserved.)


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