Moody’s upgrades Virginia credit rating outlook to ‘stable’

Moody’s Investor Services has upgraded Virginia’s AAA credit rating outlook from “negative”, which was assigned in August 2011, to “stable.” Virginia joins Maryland, Missouri and New Mexico in gaining an upgraded credit rating outlook. The four states were upgraded due to yesterday’s announcement that Moody’s had upgraded the federal credit rating outlook to “stable” as well.

In the release, Moody’s notes:

“When Moody’s placed the US government on negative outlook in 2011, it revised the outlooks of certain Aaa-rated US municipal issuers to negative to reflect their close economic, financial and capital markets linkages to the federal government. At the time, Moody’s indicated that if the US government rating were to move down, these ratings would also be likely to change because of their economic sensitivity to federal spending cuts, dependence on federal transfers and exposure to a capital markets disruption. The conditions that led to the return to a stable outlook on the US government rating reduce the exposure to these risks over Moody’’ outlook period. However, future federal budget and deficit actions could affect the credit quality of specific issuers independent of the US government bond rating or outlook.”