Moody's Ratings lifted Oklahoma's issuer rating a notch to Aa1 with a stable outlook on Wednesday, citing the state's strong fund balances, low leverage, and conservative budget management.
The upgrade is the first for Oklahoma since Moody's, Fitch Ratings, and S&P Global Ratings
Moody's upgrade affects certain lease revenue bonds issued through the state's development finance and capital improvement authorities, according to the rating agency, which said Oklahoma has about $1.9 billion of governmental debt outstanding.
"The issuer rating upgrade to Aa1 is based on Oklahoma's very strong fund balances and dedicated reserves alongside extremely low leverage and fixed costs from debt, pensions, and retiree healthcare," Moody's said in a report. "These balance sheet strengths alongside conservative budgeting practices, such as an appropriation limitation of 95% of expected revenues, allow for vast financial flexibility."
Fiscally balanced operations are expected despite Oklahoma's recent elimination of
Oil and natural gas production tax revenue fell 44.3% to $483 million in fiscal 2024 from fiscal 2023's $1.09 billion.
"The rating upgrade is a reflection of the hard work the state, Gov. (Kevin) Stitt and the legislature have done to build and maintain a stable financial foundation while navigating challenges and continuing to foster economic growth," Oklahoma Treasurer Todd Russ said in a statement.
He added that as the state "continues its commitment to economic growth and financial stability, we look forward to sharing notable achievements like real GDP growth and improved resident income levels with the rating agencies."
As of the end of 2023, Oklahoma had no general obligation bonds outstanding, according to the annual state debt report.
