The bank pays for ratings reports each time it issues a group of bonds — the ratings reflect the agencies’ analysis of the risk to investors, which in turn dictates the interest rates the borrowers will pay.

Standard & Poor’s set a AA+ rating — two steps from highest rating of AAA — on Wednesday’s offering and affirmed that rate on the bank’s roughly $1.3 billion in other bonds, reflecting a “an extremely strong financial risk profile.” Moody’s Investors Service assigned Wednesday’s offering an Aa2 rating, one step from AAA. The bond bank attached these two positive reports to Wednesday’s offering.

But a third firm, Fitch Ratings, downgraded the ratings on Maine Municipal Bond Bank’s bond total of $1.3 billion and assigned a negative outlook. Fitch changed the way it looks at grouped bonds to reflect its evaluation of the state’s pledge to cover the debt if needed.

The bond bank is including only S&P and Moody’s assessments. But Fitch’s analysis, even though it is on the total could still have an impact, according to Joseph Cuetara, senior vice president of Moors & Cabot Inc., a banking and advisory group in Boston.

Just having it out there can affect the interest charged to the bond offering’s borrowers, he said.

Over the 20 years, it could increase overall interest rates on the $27.4 million by $100,000 to $300,000, he said.

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“Fitch is saying the state of Maine isn’t there or it wasn’t as strong as it once was,” Cuetara said. “The different ratings lead to a certain amount of confusion. Investors will look for any excuse to penalize the issuer.”

The state bond bank said it only needed to include two outside two rating agency reports with the offering. It decided not to use the Fitch report, saying it did not specifically evaluate Wednesday’s bond offering.

“The new methodology doesn’t line up with Moody’s and S&P. It’s not an accurate depiction of (the bond bank’s) security,” said Maine Municipal Bond Bank Executive Director Michael Goodwin. “It’s an apples to oranges comparison and doesn’t accurately depict the offering.”

State Treasurer Bruce Poliquin said investors should pay attention to the S&P and Moody’s ratings.

“Fitch changed the methodology on pooled bond offerings. The bond bank independently buys ratings from the individual agencies. S&P and Moody’s are the largest,” said state Treasurer Bruce Poliquin. “I’m very pleased the S&P and Moody’s have retained AA credit ratings.”

The state has grappled before with concerns from rating agencies. In May, Moody’s downgraded its outlook on Maine’s economic health, while rival S&P took the opposite view and improved its outlook on the state.

The downgrade has yet to have any noticeable effect.


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