Comptroller Hegar Announces Highest Ratings for Texas Short-Term Notes

Texas Insider Report: AUSTIN Texas Wall Street credit ratings firms have given their highest ratings to this years Texas Tax and Revenue Anticipation Notes (TRANs) which will allow the state to manage cash-flow needs for fiscal 2018. Texas received the highest short-term credit ratings on the TRAN Texas Comptroller Glenn Hegar said. I am proud that Texas also maintains its historic AAA long-term credit ratings from all four major ratings agencies primarily because of flexibility in the states budgeting process Texas ability to manage a severe economic downturn and our strong economic environment compared to other states. These high ratings cut down borrowing costs save taxpayer dollars and affirm Texas commitment to conservative fiscal management and sound economic policy. Texas 2017 TRANs are rated SP-1 by Standard & Poors F1 by Fitch Inc. MIG 1 by Moodys Investors Service and K1 by Kroll Bond Rating Agency. This years $5.4 billion TRAN sale is Aug. 22. It is the first time Texas has had to issue TRANs since 2014. These annual one-year notes are sold to help fund school payments and manage cash flow between the start of the fiscal year and the arrival of tax revenue later in the year. Moodys Investors Service noted Texas credit rating reflects the strong fundamentals of the states economy which is weathering the recent energy sector downturn due to its diverse base but added front-loading of school aid payments continues to drive Texas large cash flow borrowings. Fitch commented Despite the lower oil price environment of recent years and its impact on Texas globally-important energy sector the state continues to experience steady growth in population jobs and personal income. Standard & Poors said We believe the states economic activity and revenue performance is improving as evidenced by year-to-date revenue collections through July 2017 which were 2.5 percent over forecast. Kroll noted that the states economy has diversified and expanded well beyond its past reliance on the oil and gas sector; however significantly lower oil and gas prices over time do impact the economy and reduce state revenues and the states operating cash. In a letter to state leadership Hegar pointed out that while Texas maintains a strong credit rating he cautioned that ratings firms are becoming much more focused on Texas long-term liabilities and its ability to manage cash flow in the coming years particularly the management of the Economic Stabilization Fund (ESF) or Rainy Day Fund. For more information about the TRAN sale go to trantexas.com.