July 11, 2017 / 6:18 PM / 4 months ago

Fitch downgrades Oklahoma GO bonds to 'AA' from 'AA-plus'

NEW YORK, July 11 (Reuters) - Fitch Ratings downgraded Oklahoma’s issuer default rating and General Obligation bonds to AA from AA-plus on Tuesday, citing a decrease in “financial resilience” over the last several years as it struggles to deal with changes in the energy markets.

Fitch also downgraded both Oklahoma Development Finance Authority bonds and Oklahoma Capital Improvement Authority bonds to AA-minus from AA.

The ratings, still within a high investment grade category, carry a stable outlook.

The state’s revenue collections reflect “subdued energy prices,” according to a Fitch report on Tuesday. About one-third of Oklahoma’s gross state product comes from the oil and natural gas sectors, the report said.

S&P affirmed their AA rating for the state’s GO bonds last month. As of June 2016, Moody’s Investors Service rated Oklahoma at Aa2, an equivalent opinion.

While Oklahoma has notable energy resources, one of its weaknesses is that it has few non-energy drivers, according to a March 2017 report by Moody’s Analytics.

While energy prices have been subdued, with benchmark crude oil prices hovering around the $45 per barrel and close to their lows for the year, Oklahoma’s state treasurer’s office said in a statement on Monday that monthly gross receipts, on a year-over-year basis, have been higher in five out of the last six months.

“Current data is encouraging with lagging economic indicators showing improvement in the state economy,” Oklahoma State Treasurer Ken Miller said in the statement. “Leading indicators also point to continued growth, but the anticipated strength of the recovery may be moderating as oil prices have come down slightly.” (Reporting by Stephanie Kelly; editing by Daniel Bases and Diane Craft)

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