- Associated Press - Wednesday, June 15, 2016

PIERRE, S.D. (AP) - South Dakota has the highest credit rating possible from all three major bond rating agencies after Fitch Ratings upgraded the state’s rating Wednesday.

Fitch cited the state’s “consistently conservative fiscal operations” in upgrading South Dakota’s issuer default rating to “AAA” and state-linked debt to “AA+.” Collecting top ratings has been a priority for Republican Gov. Dennis Daugaard, and Fitch’s move comes after similar upgrades from Moody’s and Standard and Poor’s since May 2015.

“These types of upgrades demonstrate our state’s exceptional credit worthiness to financial markets,” Daugaard said in a statement. “We’ve worked hard to place our state on a firm financial footing, and that stewardship is paying dividends.”

Fitch also attributed the upgrade to South Dakota’s tax structure, since revenues have exhibited less sensitivity to national economic cycles than other states. The agency credited the state’s healthy pension system and low debt.

Upgrades typically allow bonds to carry a lower interest rate, providing savings to issuers. Fitch says the rating outlook is stable.

“From a bondholder point of view, it is in the safest category of bonds as assessed by Fitch Ratings,” analyst Douglas Offerman said.

The upgrade is akin to a credit score improvement for a South Dakota resident: A higher score would mean a lower interest rate on a car or home loan, which would translate to savings over the life of the loan.

Moody’s in February lauded South Dakota’s record of structurally balancing its budget and keeping high reserves in upgrading the state’s bond rating. And Standard & Poor’s last year cited the state’s “consistently strong” financial position in bumping the state from an issuer credit rating of “AA+” to “AAA.”

Members of Daugaard’s administration have met with ratings agencies, and the governor has pushed for policies to help secure the upgrades.

“Five years ago we set a goal to be recognized as AAA with all the bond rating agencies,” Daugaard said. “With this latest upgrade, we have achieved that goal.”

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