Michigan governor tells credit rating agencies state doing 'very well'

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[April 01, 2016]    By Hilary Russ
 NEW YORK (Reuters) - Michigan Governor Rick Snyder has met with Wall Street credit rating agencies this week, telling them Michigan's economy is doing "very well" in the face of a lowered credit outlook, Snyder said on Thursday.

"We had a good, healthy discussion," Snyder told Reuters after speaking at a CUNY Graduate School of Journalism event in New York City. "Michigan economically is doing very well."

Two weeks ago, just before Michigan's most recent bond offering, Standard & Poor's Ratings Services lowered the outlook on Michigan's credit rating to stable from positive. It cited burgeoning costs associated with a lead-tainted water crisis in the city of Flint and with the cash-strapped Detroit Public Schools (DPS).

Those rising expenses "will limit the state's ability to build reserves over the nest two fiscal years," S&P analyst Carol Spain said on March 17.

Despite the outlook change, Michigan was able to sell about $82 billion of general obligation bonds with a true interest cost of 1.54 percent, showing little sign that the U.S. municipal bond market wanted to punish the state with exorbitantly high interest rates.

One encouraging economic sign in Michigan is the 4.8 percent unemployment rate reported in February versus the national jobless rate of 4.9 percent.

Snyder said it was a good time to meet with credit rating agencies because the state is not currently in the market. He tries to do it at least once a year.

(Editing by Daniel Bases and Matthew Lewis)

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