A new Credit Opinion Report from Moody’s upgrades New Mexico’s outlook on the state’s issuer and general obligation bonds from stable to positive.

This is the first time New Mexico’s Moody’s bond rating has risen in a decade.

“The improved bond rating outlook by Moody’s reflects the administration’s strong fiscal governance on several fronts,” Department of Finance and Administration Secretary Wayne Propst said in a press release. “These included reducing long-term debt issuance, maintaining healthy operating reserve balances exceeding 30 percent, stabilizing long-term pension liabilities, and an overall commitment to responsible debt management while increasing permanent fund balances to secure the state’s future.”  

“New Mexico’s (Aa2 positive) already strong credit metrics are likely to improve as the state continues to maintain healthy operating reserves and forecasts further growth in its sizable permanent fund balances,” the report states. “On September 20, we [Moody’s] revised the outlook on the state to positive, reflecting our view that this improved financial position will outweigh some risks inherent in its economy, which is concentrated in oil and gas and government employment.” 

Related: Permanent fund investments expected to exceed oil and gas revenues in 15 years

If the state’s current actions continue, Moody’s will consider upgrading New Mexico’s bond rating in 12-18 months, the press release states.

“This new national report is great news that demonstrates we’re making sound fiscal decisions that will benefit New Mexicans for years to come,” Governor Michelle Lujan Grisham said in the press release. “It’s clear that our fiscal strategy is working, and we’ll continue to make smart investments and prepare for the future.” 

Moody’s bond rating methodology adjusted ratings assigned to New Mexico’s severance tax and transportation bonds which should go back to their previous levels by the time any new bonds are issued, the press release states.

“Because of strong revenue and financial investments, the state has no plans to issue long-term severance tax bonds for the foreseeable future,” the press release states.