Federal debt ceiling impasse could hurt state’s bond rating
10/15/2013 6:19 PM
10/15/2013 6:20 PM
State Treasurer Janet Cowell is concerned that the state’s AAA-bond rating could suffer if Congress fails to take action to avert defaulting on the nation’s debts.
In a letter to the state’s Congressional delegation, Cowell warned that default and the partial shutdown of the federal government could hurt the federal government’s bond rating and cascade down to the state and local level.
The reason: the state’s “dependence upon federal funds and the large military presence in the state.”
Downgraded bond ratings would translate into higher borrowing costs for North Carolina and its local governments – as well as the U.S. government, Cowell noted.
“As a result, economic growth and jobs would suffer,” she wrote.
Cowell’s letter to the Congressional delegation was written Sept. 30 and released Tuesday in response to a reporter’s inquiry about the impact of a federal default.
Schorr Johnson, a spokesman for the Treasurer’s office, also said Tuesday in an email that although a federal default “would be a negative for the global financial markets,” the diversification of the state’s $80 billion pension fund “will help to manage any impact.”
Join the Discussion
News & Observer is pleased to provide this opportunity to share information, experiences and observations about what's in the news. Some of the comments may be reprinted elsewhere on the site or in the newspaper. We encourage lively, open debate on the issues of the day, and ask that you refrain from profanity, hate speech, personal comments and remarks that are off point. Thank you for taking the time to offer your thoughts.