Moody’s Threatens Multiple States’ Credit Ratings

NEW YORK ( – Moody’s Investor Services has fired another shot across the bow of both the federal government and individual states. Tuesday afternoon, Moody’s put five states on review for a downgrade of their credit ratings.

Moody’s said the states were put on review as part of an announcement made July 13 that put the federal government’s credit rating on review for a possible downgrade if the government doesn’t strike a deal to raise the national debt limit.

Florida managed to stay off the list, but several states around the Sunshine State were not as lucky.

If the U.S. credit rate is downgraded by one notch or more, the five states: South Carolina; Tennessee; Virginia; New Mexico; and Maryland, would likely be downgraded at the same time.

Moody’s cited high federal employment and Medicaid exposure as the reasons behind putting the states on review for a downgrade.

Another ten states: Alaska; Delaware; Georgia; Indiana; Iowa; Missouri; North Carolina; Texas; Utah; and Vermont, were also analyzed, but in Moody’s view, those states can all withstand the credit rating of the federal government being downgraded one notch.

Moody’s said the review will affect approximately $24 billion of general obligations and related debt.


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