Maine’s credit isn’t bad, but it would be better if the state’s economy were growing at a faster pace, says one of the country’s top rating agencies.
On Wednesday, Fitch Ratings renewed its AA rating on Maine’s outstanding general obligation bonds and its slightly lower A+ rating on the Maine Municipal Bond Bank’s outstanding general resolution bonds.
A rating of AA is two levels below the best possible rating of AAA, and an A+ rating is two levels below AA. Much like a consumer’s credit score, a state’s bond ratings determine its ability to borrow money affordably.
Maine’s moderately high ratings reflect the state’s responsive budget management and low overall debt outlook, along with its fiscal challenges such as below-average economic growth prospects and meager reserve funds, Fitch said.
“The AA rating reflects Maine’s generally steady revenue performance and very manageable long-term liabilities, offset by persistent structural pressures, thin reserve levels and a relatively stagnant economic base,” the company said in a news release.
Other economic challenges for Maine cited by Fitch are its high median age, virtually nonexistent net population growth and flat-to-declining labor force.
Fitch is one of the “big three” credit-rating agencies recognized by the U.S. Securities and Exchange Commission, along with Moody’s and Standard and Poor’s.
Healthy growth for credit unions
More than 14,000 Mainers joined a credit union in 2014, continuing an upward trend since the Great Recession that’s likely fueled in part by consumer backlash against the big banks, according to a report from the Maine Credit Union League.
The state’s roughly 60 credit unions boasted a total of more than 650,000 members at the end of the year, according to the report – a 2.2 percent increase over year-end statistics for 2013.
During the same period, combined assets at Maine’s credit unions grew 4.7 percent to end the year at $6.43 billion, the league found. Lending activity increased by 6.3 percent to $4.42 billion in outstanding loans despite a drop-off in the home refinancing market.
Savings at Maine credit unions increased at a steady 4 percent for the year, an increase of nearly $210 million, to a combined total of $5.45 billion, the league said.
Maine Credit Union League President John Murphy said in a news release that the growth statistics are “further indication that Maine’s credit unions are the financial services provider of choice for many Maine consumers.”
Since 2008, when most experts agree that the Great Recession began, credit unions in the state have added a net total of more than 55,000 new members, he said.
“While popular before the recession, consumers appear to have a significantly higher appreciation for the value and benefits that Maine’s credit unions provide, including being local and owned by the members that use the credit union services,” Murphy said.
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