KBRA Assigns AAA Rating to State of Maryland General Obligation Bonds

NEW YORK–(BUSINESS WIRE)–#creditratingagency–KBRA assigns a long-term rating of AAA with the Stable Outlook to the State of Maryland’s General Obligation Bonds.

The rating is underpinned by the State’s established track record of conservative budget management; moderate debt and continuing obligations profile; and, a resource base that while slow growing, is characterized by strong educational attainment, structurally low unemployment, and per capita personal income exceeding the national average. The rating places particular emphasis on the proven effectiveness of the State’s budget management framework which is evidenced by consistent maintenance of prudent reserves through the full economic cycle.

The State took decisive action in addressing a challenging $3 billion budget gap heading into the fiscal year beginning July 1, 2025. The gap had arisen due to the need to phase-out the use of extraordinary reserves accumulated during the pandemic and a challenging economic outlook per the State’s highest in the nation dependence on federal employment amid the current federal administration’s focus on cost cutting and reductions in force. The gap was addressed through a combination of revenue enhancements ($1.2 billion), spending reductions ($1.3 billion), and use of reserves and reversions ($0.5 billion). Solutions were primarily recurring in nature and are projected to hold the aggregate state reserve fund and general fund balance steady YoY.

Federal employment cuts in the State have been significant, with headcount reduced 15.3% between January and November of 2025. The unemployment rate nevertheless remains 0.4% below the national average on a seasonally adjusted basis and the absolute level of federal employment remains in line with the level recorded in 2010. While it remains to be seen how deep federal reductions may ultimately cut, KBRA believes this headwind is manageable over the near-term. Furthermore, the State’s proximity to the seat of the federal government in Washington, DC, in KBRA’s view, will continue to confer economic stability and high value-added employment to the State over the longer-term.

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Methodologies

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

Disclosures

Further information on key credit considerations, sensitivity analyses that consider what factors can affect these credit ratings and how they could lead to an upgrade or a downgrade, and ESG factors (where they are a key driver behind the change to the credit rating or rating outlook) can be found in the full rating report referenced above.

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), one of the major credit rating agencies (CRA), is a full-service CRA 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 (DRO) by the Ontario Securities Commission for issuers of asset-backed securities to file a short form prospectus or shelf prospectus. KBRA is also recognized as a Qualified Rating Agency by Taiwan’s Financial Supervisory Commission and is recognized by the National Association of Insurance Commissioners as a Credit Rating Provider (CRP) in the U.S.

Doc ID: 1012975

Contacts

Analytical Contacts

Peter Scherer, Senior Director (Lead Analyst)

+1 646-731-2325

peter.scherer@kbra.com

Linda Vanderperre, Managing Director

+1 646-731-2482

linda.vanderperre@kbra.com

Douglas Kilcommons, Managing Director (Rating Committee Chair)

+1 646-731-3341

douglas.kilcommons@kbra.com

Business Development Contacts

William Baneky, Managing Director

+1 646-731-2409

william.baneky@kbra.com

James Kissane, Senior Director

+1 646-731-2380

james.kissane@kbra.com