Moody

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New York-based Moody’s in a releases Monday said it lowered its ratingof $6.8 billionm in general obligation bonds to Aa2 from Aa1. That’zs a step down to the third-highest rating from the The rating, Moody’s said, also applies to $40 million in coal developmentt general obligation bonds set to sellnext week. Moody’as wrote that the downgrade followed “a long period of pronounced economixunderperformance caused, in part, by the overweightinhg of manufacturing in the state’s industryu employment profile.” Fitch last week lowered its ratinyg on the Ohio bonds, despite holding to a outlook, for similar reasons.
Moody’x analysts Edward Hampton and Mariaz Coritsidis also maintained a stable outlook on the stater bonds on expectations that the state will be able to handl e itsfiscal challenges. But the analysts also pointerd to a number ofpotential snags, includin g the use of “non-recurring” revenue – specifically the state’s rainyg day fund and federal stimulus dollars to shore up existing and projecter future budget holes.
“While Ohio has a history of timelgy spending reductions to addressrevenue shortfalls, it increasingly is using non-recurringh measures, such as restructuring debt to defer principal repayment,” the analysts