Summary: North Carolina; Appropriations

S&P Global Ratings assigned its 'AA+' rating to North Carolina's $300 million series 2022A limited obligation (Build NC) bonds. The outlook is stable. The series 2022A bonds are limited obligations of the state payable from funds available in the state Highway Trust Fund (HTF), separate and distinct from the state's general fund, subject to annual appropriation by the General Assembly. We rate the bonds one notch lower than North Carolina's general creditworthiness (as reflected in our 'AAA' general obligation [GO] rating on the state) to account for the appropriation risk associated with the HTF revenues, based on the application of our "Issue Credit Ratings Linked To U.S. Public Finance Obligors' Creditworthiness" criteria, published Nov. 20, 2019. For information on our

...In our view, these bonds have a strong relationship to the obligor and are providing funding for projects we believe are significantly important to the state. We consider the intended payment source of revenues to the HTF to be moderate. In our opinion, there is no unusual political, timing, or administrative risk related to the debt payment. The outlook on the 2022A bonds reflects the outlook on North Carolina. The stable outlook reflects our view that North Carolina will continue to exercise proactive fiscal management as recently enacted tax reforms lower general fund revenues over the next decade. Furthermore, we believe the state will approach potential court-mandated additional education spending with an emphasis on structural balance. It also reflects the state's commitment to strong fiscal management of the budget, reserve balances, debt, and retirement liabilities. The state has demonstrated the strength of such commitments by building reserves during the economic expansion and...

Summary