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Mississippi (State of) -- Moody's assigns Aa2 to Mississippi's GO Refunding Bonds, Series 2020A and 2020B; outlook stable

Rating Action: Moody's assigns Aa2 to Mississippi's GO Refunding Bonds, Series 2020A and 2020B; outlook stable

Global Credit Research - 16 Jul 2020

New York, July 16, 2020 -- Moody's Investors Service has assigned Aa2 ratings to the State of Mississippi's $397.7 million Taxable General Obligation Refunding Bonds, Series 2020A and $37.6 million General Obligation Refunding Bonds, Series 2020B. The outlook is stable.

RATINGS RATIONALE

Mississippi's general obligation rating reflects historically stable revenue and strong financial controls that led to healthy fund balances and renewed contributions to the rainy day fund prior to the outbreak of the coronavirus pandemic. The profile also incorporates low income levels, elevated debt levels, rising pension costs and a traditionally stable but low-growth economy.

We regard the coronavirus outbreak as a social risk under our ESG framework, given the substantial implications for public health and safety. The coronavirus crisis is not a key driver for this rating action. We do not see any material immediate credit risks for Mississippi. However, the situation surrounding coronavirus is rapidly evolving and the longer term impact will depend on both the severity and duration of the crisis. If our view of the credit quality of Mississippi changes, we will update the rating and/or outlook at that time.

RATING OUTLOOK

The state's stable outlook is supported by the expected continuance of conservative fiscal management, which will enable the state to weather the current economic downturn, while limiting the growth of already elevated debt levels. The rating also incorporates an expectation of a stabilization of revenue and economic trends and a resumption of deposits to the rainy day fund after the immediate crisis passes.

FACTORS THAT COULD LEAD TO AN UPGRADE OF THE RATINGS

- Growth in state wealth levels reflecting a sustained progress trending to national average

- Sustained increase in fund balance

- Substantial decrease in debt and pension liabilities

FACTORS THAT COULD LEAD TO A DOWNGRADE OF THE RATINGS

- Depletion of financial reserves

- Economic underperformance

- Persistent growth in retiree benefit liabilities

LEGAL SECURITY

Mississippi's general obligation bonds are secured by a pledge of the state's full faith and credit. If funds appropriated by the legislature are insufficient for debt service, the treasurer shall fill any deficiency with other, non-appropriated funds in the state treasury.

USE OF PROCEEDS

The proceeds of General Obligation Refunding Bonds, Series 2020A and Series 2020B will be used to advance refund general obligation bonds and pay the termination fees for swap agreements associated with certain refunded bonds.

PROFILE

Mississippi is the 34th-largest state, with a population of 3.0 million, and the 32nd-largest in area. With a nominal GDP of $114.8 billion in 2019, it had the 37th-largest economy in the country. Per-capita income was just 69.5% of the US level, the lowest level of any state.

METHODOLOGY

The principal methodology used in these ratings was US States and Territories published in April 2018 and available at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBM_1084466. Alternatively, please see the Rating Methodologies page on www.moodys.com for a copy of this methodology.

REGULATORY DISCLOSURES

For further specification of Moody's key rating assumptions and sensitivity analysis, see the sections Methodology Assumptions and Sensitivity to Assumptions in the disclosure form. Moody's Rating Symbols and Definitions can be found at: https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_79004.

For ratings issued on a program, series, category/class of debt or security this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series, category/class of debt, security or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the credit rating action on the support provider and in relation to each particular credit rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.

The ratings have been disclosed to the rated entity or its designated agent(s) and issued with no amendment resulting from that disclosure.

These ratings are solicited. Please refer to Moody's Policy for Designating and Assigning Unsolicited Credit Ratings available on its website www.moodys.com.

Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.

Moody's general principles for assessing environmental, social and governance (ESG) risks in our credit analysis can be found at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1133569.

The Global Scale Credit Rating on this Credit Rating Announcement was issued by one of Moody's affiliates outside the EU and is endorsed by Moody's Deutschland GmbH, An der Welle 5, Frankfurt am Main 60322, Germany, in accordance with Art.4 paragraph 3 of the Regulation (EC) No 1060/2009 on Credit Rating Agencies. Further information on the EU endorsement status and on the Moody's office that issued the credit rating is available on www.moodys.com.

Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.

Please see the ratings tab on the issuer/entity page on www.moodys.com for additional regulatory disclosures for each credit rating.

Joshua Grundleger Lead Analyst State Ratings Moody's Investors Service, Inc. 7 World Trade Center 250 Greenwich Street New York 10007 US JOURNALISTS: 1 212 553 0376 Client Service: 1 212 553 1653 Edward Hampton Additional Contact State Ratings JOURNALISTS: 1 212 553 0376 Client Service: 1 212 553 1653 Releasing Office: Moody's Investors Service, Inc. 250 Greenwich Street New York, NY 10007 U.S.A JOURNALISTS: 1 212 553 0376 Client Service: 1 212 553 1653

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