New Mexico’s Bond Rating Upgrade, Explained: What Changed, Why It Matters, and What Could Still Go Wrong

Moody’s Ratings has raised New Mexico’s credit rating from Aa2 to Aa1, an upgrade that could help the state borrow money at lower interest rates and attract more investors to buy its public debt, according to the Albuquerque Journal.

In an opinion column, state Sen. George Muñoz and Finance and Administration Secretary Wayne Propst said the upgrade reflects years of work to make state finances less tied to oil and gas. Moody’s said the state’s "well-established and prudent governance practices" have partially offset its reliance on volatile severance taxes. One key policy is Senate Bill 26 from 2023, which limits swings in severance tax revenue and puts extra money into the Severance Tax Permanent Fund; the column puts those investments at about $588 million in fiscal 2025, over $1.2 billion in fiscal 2026 and around $1.7 billion in fiscal 2027.

The Journal reports that the state’s permanent funds reached about $64 billion and that New Mexico has used more cash for big projects in recent years instead of taking on more debt. The Department of Finance and Administration says Moody’s also raised ratings on general obligation bonds, transportation tax bonds, severance tax bonds and the school district intercept program.

Energy still accounts for a large share of the state’s income, and the Journal says recent revenue growth came from more oil production in the Permian Basin. Moody’s and state officials also warned about risks from federal policy, including looming funding reductions that could affect rural hospitals and cuts to Medicaid eligibility starting in 2027.

Editor’s note: Updated Oct. 31, 2026. This story is now part of Daily Reports, our New Mexico news roundup, and was revised to credit the Albuquerque Journal’s original reporting. Learn how Daily Reports works in our editorial standards.