N. Carolina Bond Rating Downgraded
Aug. 19, 2002
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RALEIGH, N.C. (AP) _ North Carolina's triple-A bond rating, which allowed the state to borrow money cheaply, was downgraded Monday by Moody's Investor Service.
Moody's said the state's continuing fiscal problems and use of one-time revenue for ongoing needs figured into the decision to drop the rating one level to Aa1.
``The task of restoring structural budget balance and rebuilding reserves faces political and economic obstacles. The state is considering actions which over time could help to restore fiscal stability and rebuild reserves,'' Moody's said in a statement.
Moody's is one of three bond rating agencies that rates the state's bonds, which in turn affects the interest rates North Carolina pays on borrowing. Triple-A is the highest rating given by the bond rating agencies, and reflects the state's ability to repay its loans.
The downgrade will affect $3.5 billion of the state's long-term debt, Moody's said. It wasn't immediately clear how much North Carolina will pay in extra interest because of the change.
In a letter to lawmakers, Treasurer Richard Moore said short-term effects would be minimal.