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Smith's Research & Gradings
February 1, 2021

Smith's Research & Gradings

KBRA: State Revenues Beating Predictions

KBRA: State Revenues Beating Predictions

Kroll Bond Rating Agency's (KBRA)review of state revenue was lead by Paul Kwiatkoski, Managing Director.  The State revenue losses show the results may be much less severe than originally estimated. In the months following the onset of the Coronavirus Pandemic, "the expected economic knock-on effects were severe due to the near cessation of economic activity throughout parts of the nation," with conditions only gradually improving through 2020 and beyond. Many states based their 2021 estimated revenues based on these early forecasts.

Estimates of national unemployment rates played a large roll in the miscalculations, Mr. Kwiatkoski explained. The Center on Budget and Policy Priorities (CBPP) based its state revenue estimates of May 2020 on Congressional Budget Office (CBO) forecasts of national unemployment rates that were expected to hit 11.5% at year-end 2020,before falling to 8.6% at year-end 2021.

"Other observers forecast even more dire economic conditions," Mr. Kwiatkoski said. "Goldman Sachs forecast a peak unemployment rate of 25% in the second quarter 2020. The actual level of unemployment was not this severe,having peaked at 14.8% in April 2020 before dropping to 6.7% at the end of 2020. In light of economic performance faring better than originally forecast and the strong link between state revenue collections and economic performance, state revenues were underestimated in many budget forecasts."

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Yankee Stadium Bonds Baa1/NR/BBB+

Fitch Ratings assigned a 'BBB+' rating to the New York City Industrial Development Agency's (NYC IDA) $923 million PILOT Revenue Refunding Bonds,Series 2020, Yankee Stadium Project. Fitch has also affirmed the 'BBB+' rating on the Series 2006 and 2009 bonds, as well as the NYCIDA's Series 2006 and 2009 Rental Revenue Bonds, issued on behalf of Yankee Stadium LLC (StadCo). The Rating Outlook is Stable. The transaction will refund $863 million Series 2006 and 2009 bonds, generating more than $200 million in present value savings.

La Niña and Arctic Oscillation Bring Winter Storms

Extreme winter weather hit 44 states and caused power outages for millions of Americans. Texas reported 10 deaths due to the cold temperatures. Smith's ESGradings has conducted decades of research on climate change. This year's events are due, in part, to La Nina.

Outlook Negative

California High Speed Train May Jump the Tracks

Oracle co-founder Larry Ellison and Tesla founder Elon Musk both agree when it comes to California's $77 billion high-speed rail project—the project is going to jump the tracks.

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