Conning Releases Q4 2015 State of the States Update

December 08, 2015

Conning Releases Q4 State of the States Update

  • Overall Positive Outlook For U.S. State Credit Quality   

  • Outstanding State General Obligation Debt Is Declining  

  • Best Performing Large States include California and New York                             

HARTFORD, CT – December 8, 2015 – In its Q4 update on U.S. state credit quality, global investment manager Conning finds that in the aggregate, state credit quality remains strong. A rebounding U.S. economy has helped to increase state revenues and improve fund balances. Strong employment growth plus solid population growth (for some states), and higher consumer confidence paired with improved housing prices continue to boost revenues in most states. The economic improvement, however, is not uniform. Illinois, Pennsylvania and New Jersey are lagging, and many of the oil patch states are feeling the impact of depressed oil/gas prices.  

Conning’s most recent State of the States Municipal Credit update ranks the states by selected economic indicators to produce a state economic index. For this report, Conning’s municipal credit research team updated the economic indicators used in its annual State of the States ranking that account for 48% of the total measurement used in our state rankings. “Our state research is used to help guide our firm’s municipal bond investment decisions,” said Paul Mansour, a Managing Director and the head of the municipal credit research group at Conning. “As a key differentiator, Conning’s State of the States Municipal Credit ranking emphasizes economic debt, not just stated debt.” Mansour added that this update helps Conning’s investment professionals make better-informed credit decisions and improve relative value for client portfolios.  

Leaders and Laggards  

Arizona, California, Colorado, Florida, Georgia, Nevada, Oregon, Texas, Utah and Washington top the list of Conning’s improving states -- those moving in the right direction in terms of recent economic indicators. Arizona, Colorado, Florida, Georgia, Oregon, Texas and Utah are also Conning’s top performing states. These are the states that have both strong economic indicators combined with a high State of the States ranking from our May 2015 report. In other words, these states are good and getting better. Declining states include several oil-patch states, Illinois and Connecticut. These states are experiencing relatively low employment and population growth, resulting in slow growth in both state revenues and home prices.    

Energy Producing and Oil Patch States  

Growth in these states has taken a hiatus associated with depressed oil/gas activities and prices. Credit quality in most of these states is being buttressed by large reserves, low legacy costs and favorable business conditions. Texas has offset declines in oil and gas activities with gains in other parts of its economy. By contrast, Alaska, which derives 90% of its state revenues from oil and gas activities revenues, has not been able to offset the impact. At present, Alaska has large reserve balances and will need fiscal discipline and perhaps new revenue sources to address the long term decline in oil and gas activity in the state.   

About Conning’s Municipal Credit Research Update  

Conning’s State of the States reports help the firm’s investment professionals to make better-informed credit decisions and improve relative value for client portfolios. State of the States indicators include measures of economic activity, such as income levels, housing prices, foreclosure rates, as well as a state’s overall business environment (i.e., ability to attract new business). In this update, State economic indicators account for 48% of the quantitative measures used to determine a state's rank in the annual State of the States Report. A state's economic competitiveness accounts for 12% of the total score with state specific general obligation credit indicators accounting for 40% of the score. A full comprehensive State of the States report which assesses all indicators is expected to be released in May 2016.  


Conning ( is a leading investment management company for the global insurance industry, with $93 billion in assets under management as of September 30, 2015, through Conning, Inc., Conning Asset Management Limited, Cathay Conning Asset Management Limited, Goodwin Capital Advisers, Inc., and Conning Investment Products, Inc. that are all direct or indirect subsidiaries of Conning Holdings Limited (collectively “Conning”) which is one of the family of companies owned by Cathay Financial Holding Co., Ltd. a Taiwan-based company. The company's unique combination of asset management, risk and capital management solutions and insurance research helps clients achieve their financial goals through customized business and investment strategies. Founded in 1912, Conning provides clients with innovative solutions, leveraging its global capabilities, investment experience, proprietary research and risk management technology. Headquartered in Hartford, Connecticut, Conning also delivers its services globally through its offices in New York, London, Cologne, Hong Kong and Tokyo.