KBRA assigns a long-term rating of AA with a Stable Outlook to the State of Louisiana General Obligation Refunding Bonds, Series 2024-C, Series 2024-D, Series 2024-E, and Series 2025-A (Forward Delivery). Concurrently, KBRA affirms the AA long-term rating and Stable Outlook on parity General Obligation bonds outstanding.

The Stable Outlook reflects Louisiana’s diversifying economic base, strong and improving reserve position, and effective financial management practices. The state’s conservative budgeting and prudent management of accumulated reserve balances will remain in focus in an environment of waning Federal pandemic aid, and while continuing to acknowledge Louisiana's economic vulnerability to climatic events, including hurricanes and coastal erosion.

Key Credit Considerations

The rating actions reflect the following key credit considerations:

Credit Positives

• Constitutional balanced budget requirement, coupled with statutory limitations on fund balance utilization for operations.
• Improving reserve and liquidity position, supported by revenues that proved resilient throughout the COVID-19 pandemic.
• Moderate leverage metrics, coupled with a formidable legal framework prioritizing debt repayment.

Credit Challenges

• Comparatively weak socioeconomic metrics relative to other U.S. States.
• Some exposure to commodity pricing volatility, given the employment and economic output concentration in chemical and petroleum production.
• Louisiana’s economy is exposed to volatility related to climate events, including hurricanes and coastal erosion.

Rating Sensitivities

For Upgrade

• Improvement in the state's socioeconomic metrics, notably personal incomes, could lead to upward rating migration over time.
• Improved pension funding status across the State’s seven funds.

For Downgrade

• A weakening of budgetary performance, reserves, or direct liquidity.
• The reversal of financial measures enacted to enhance budgetary stability.

To access rating and relevant documents, click here.

Methodologies

• Public Finance: U.S. State General Obligation Rating Methodology
• ESG Global Rating Methodology

Disclosures

A description of all substantially material sources that were used to prepare the credit rating and information on the methodology(ies) (inclusive of any material models and sensitivity analyses of the relevant key rating assumptions, as applicable) used in determining the credit rating is available in the Information Disclosure Form(s) located here.

Information on the meaning of each rating category can be located here.

Further disclosures relating to this rating action are available in the Information Disclosure Form(s) referenced above. Additional information regarding KBRA policies, methodologies, rating scales and disclosures are available at www.kbra.com.

About KBRA

Kroll Bond Rating Agency, LLC (KBRA) is a full-service credit rating agency registered with the U.S. Securities and Exchange Commission as an NRSRO. Kroll Bond Rating Agency Europe Limited is registered as a CRA with the European Securities and Markets Authority. Kroll Bond Rating Agency UK Limited is registered as a CRA with the UK Financial Conduct Authority. In addition, KBRA is designated as a designated rating organization by the Ontario Securities Commission for issuers of asset-backed securities to file a short form prospectus or shelf prospectus. KBRA is also recognized by the National Association of Insurance Commissioners as a Credit Rating Provider.

Doc ID: 1005356

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