Gov. Bill Haslam said Wednesday he is “concerned about it but not overly” that the U.S. debt crisis has jeopardized Tennessee’s top-rated AAA credit rating.
Moody’s Investors Services told Tennessee and four other states this week that they face downgrades because of their dependence on federal revenue.
“Should the U.S. government’s rating be downgraded to Aa1 or lower, these five states’ ratings would likely be downgraded as well,” the bond-rating agency said.
Maryland, New Mexico, South Carolina and Virginia also were placed on the list for possible downgrades in credit ratings. All now enjoy AAA ratings. Borrowing costs would increase if their ratings are lowered. Ten other states have the highest bond ratings.
A week ago, Moody’s put the U.S. government bond rating on review because of the “rising possibility” that the nation’s debt limit will not be raised on a timely basis.
Virginia Gov. Bob McDonnell said Tuesday he was “furious” about Moody’s warning and called it “a national embarrassment” that the federal government is two weeks away from defaulting on its debts.
Haslam was more guarded in his comments to reporters.
“What they said is if the federal government defaults on their debt, that leaves states exposed and it does,” Haslam said. “Regardless, the state of Tennessee will be in good shape. I think we’re in maybe one of the two or three best financial states of any state out there. But that impact on our debt would cause some increased interest costs or could in some instances. So we’re concerned about it but not overly because of the financial condition we’re in.”