SANTA FE, NM— The national bond rating institution Moody's has upgraded the outlook on New Mexico's issuer and general obligation bonds from stable to positive based on strong general fund reserves and pension funding initiatives, according to its Credit Opinion Report highlighting New Mexico's recent fiscal practices.

"This new national report is great news that demonstrates we're making sound fiscal decisions that will benefit New Mexicans for years to come," said Gov. Michelle Lujan Grisham. "It's clear that our fiscal strategy is working, and we'll continue to make smart investments and prepare for the future."

According to Moody's report, "New Mexico's (Aa2 positive) already strong credit metrics are likely to improve as the state continues to maintain healthy operating reserves and forecasts further growth in its sizable permanent fund balances. On September 20, we [Moody's] revised the outlook on the state to positive, reflecting our view that this improved financial position will outweigh some risks inherent in its economy, which is concentrated in oil and gas and government employment."

Should current state actions continue, Moody's will consider upgrading the state issuer, general obligation, and severance tax bonds in the next 12 to 18 months.

"The improved bond rating outlook by Moody's reflects the administration's strong fiscal governance on several fronts," said DFA Sec. Wayne Propst. "These included reducing long-term debt issuance, maintaining healthy operating reserve balances exceeding 30%, stabilizing long-term pension liabilities, and an overall commitment to responsible debt management while increasing permanent fund balances to secure the state's future."

While changes to Moody's bond rating methodology adjusted the rating assigned to the state's severance tax and transportation bonds, those ratings should be restored to previous levels by the time any new bonds are issued. Because of strong revenue and financial investments, the state has no plans to issue long-term severance tax bonds for the foreseeable future.

All Moody's ratings on the state's long-term bonds are among the highest investment grade levels.