STATE HAS $222.5 MILLION IN GENERAL OBLIGATION AND $2.4 BILLION IN TOTAL DEBT OUTSTANDING
New York, February 02, 2012 -- Moody's Investors Service has affirmed the Aa2 rating and stable
outlook assigned to the state of Oklahoma's Aa2 general obligation
debt. At the same time, Moody's has also affirmed the
related ratings on Oklahoma's lease appropriation debt. The
rating is based on conservative fiscal practices, healthy fund balances,
and below average debt levels, which are counterbalanced by constitutional
constraints on the ability to raise revenue, industrial concentration
in the volatile energy sector as well as a large, unfunded pension
liability.
SUMMARY RATING RATIONALE
STRENGTHS
-- Conservative fiscal management institutionalized in constitutional
limit that only 95% of estimated revenue can be appropriated
-- Maintenance of healthy balance sheet
-- Oil and gas reserves that have buoyed state economy
CHALLENGES
-- Energy sector volatility
-- High bar to raise taxes constrains financial flexibility
-- Trend towards reduction in personal income tax further
limits flexibility
OUTLOOK
The stable outlook reflects the assumption of continuing stable to positive
economic and revenue growth coupled with the continuation of conservative
fiscal practices.
WHAT COULD MAKE THE RATING GO UP
-- Further reduction in unfunded pension liability or formulation
of plan to provide full actuarial funding on a recurring annual basis
-- Industrial diversification in conjunction with continuing
health of energy sector
WHAT COULD MAKE THE RATING GO DOWN
-- Decrease in oil or gas exploration leading to severe
economic dislocation
-- Structural imbalance leading to depletion of available
reserves
PRINCIPAL METHODOLOGY
The principal methodology used in this rating was Moody's State Rating
Methodology published in November 2004. Please see the Credit Policy
page on www.moodys.com for a copy of this methodology.
REGULATORY DISCLOSURES
Although this credit rating has been issued in a non-EU country
which has not been recognized as endorsable at this date, this credit
rating is deemed "EU qualified by extension" and may still
be used by financial institutions for regulatory purposes until 30 April
2012. Further information on the EU endorsement status and on the
Moody's office that has issued a particular Credit Rating is available
on www.moodys.com.
For ratings issued on a program, series or category/class of debt,
this announcement provides relevant regulatory disclosures in relation
to each rating of a subsequently issued bond or note of the same series
or category/class of debt or pursuant to a program for which the ratings
are derived exclusively from existing ratings in accordance with Moody's
rating practices. For ratings issued on a support provider,
this announcement provides relevant regulatory disclosures in relation
to the rating action on the support provider and in relation to each particular
rating action for securities that derive their credit ratings from the
support provider's credit rating. For provisional ratings,
this announcement provides relevant regulatory disclosures in relation
to the provisional rating assigned, and in relation to a definitive
rating that may be assigned subsequent to the final issuance of the debt,
in each case where the transaction structure and terms have not changed
prior to the assignment of the definitive rating in a manner that would
have affected the rating. For further information please see the
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Information sources used to prepare the rating are the following:
parties involved in the ratings and public information.
Moody's considers the quality of information available on the rated
entity, obligation or credit satisfactory for the purposes of issuing
a rating.
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information received in the rating process.
Please see Moody's Rating Symbols and Definitions on the Rating
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recovery.
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for the last rating action and the rating history. The date on
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Consequently, Moody's provides a date that it believes is
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Please see www.moodys.com for any updates on changes to
the lead rating analyst and to the Moody's legal entity that has
issued the rating.
Julius Vizner
Asst Vice President - Analyst
Public Finance Group
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653
Edward Hampton
Vice President - Senior Analyst
Public Finance Group
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653
Releasing Office:
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653
MOODY'S AFFIRMS OKLAHOMA'S Aa2 GENERAL OBLIGATION RATING AND STABLE OUTLOOK