Agency affirms Florida’s AAA credit rating despite U.S. outlook change to ‘negative’

TALLAHASSEE, Fla. – Moody’s Investors Service affirmed Florida’s AAA credit issuer rating, despite the U.S. government’s rating being downgraded from “stable” to “negative.”

The AAA rating indicates that the state’s credit profile “likely would withstand a one-notch US rating downgrade.”

Florida is joined by Maryland and Virginia as affirmed states, according to Moody’s. The group explained the reason largely had to do with the eastern seaboard states’ close connection to Washington D.C., with a more federal-government-derived GDP.

”The State of Florida’s stable outlook incorporates the expectation that sound fiscal management practices will continue through future economic cycles and administrations,” the investor service said.

“Moody’s expects continued commitment to maintain structural balance, along with maintenance of strong reserve levels to offset economically sensitive sales tax collections,” they added.

Moody’s explained that Florida’s regular need for federal disaster relief is “unlikely” to be effected even as U.S. sovereign credit is downgraded.

They warned that the main three factors that could lead to the state downgrading in its ratings included meaningful decline in state reserves, prolonged economic downturn, and additional long-term leverage and increase in fixed costs.

Florida has a population of around 22.2 million residents and boasts a $1.44 trillion GDP. The fourth largest of any state in the country.

Moody’s rating is similar to Fitch’s AAA rating that also affirmed for the state of Florida in August.

The group gave multiple reasons for handing Florida the best credit rating, one being the state’s “continued economic and population growth,” which Fitch said is a prime factor in their assessment that Florida’s revenue will outpace U.S. inflation over time.