Moody's gives negative outlook to Kentucky debt

Moody's Investors Service said it revised the outlook to negative from stable on the Commonwealth of Kentucky's issuer debt and outstanding lease appropriation-backed debt.

About $4.6 billion of outstanding debt is affected.

The negative outlook reflects Kentucky's ongoing economic and financial weakening, leading to revenue underperformance and sizable budget deficits, the agency said.

Moody's said it assigned a rating of Aa3 to the Kentucky State Property and Building Commission's lease revenue bonds, in conjunction with the commission's upcoming $400 million Project No. 89 bond issuance.

Moody's also affirmed Kentucky's Aa2 issuer rating, the Aa3 rating on its general fund- and road fund-supported lease appropriation debt, and the A1 rating on non-university agency fund supported lease debt.

The outstanding debt was issued by various entities, including $648 million from the Kentucky Asset/Liability Commission, $121 million from the Kentucky Infrastructure Authority, $2.4 billion from the Kentucky State Property and Buildings Commission, $877 million from the Kentucky Turnpike Authority and $570 million from county issuers for Administrative Office of the Courts projects.

In addition, Moody's said it lifted the outlook to stable from negative on the Kentucky School District Enhancement Program and the Kentucky Public University Intercept Program.

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