As stated in an article published by The Bond Buyer, dated 7/26/23, the Commonwealth of Kentucky continues to post record economic gains. Following is a summary:

  • In July 2023, Kentucky experienced the largest surplus in its history, as the general fund budget had a $1.55 billion overage at the end of fiscal 2023.
  • Nearly all of the surplus will go into the State’s rainy-day fund, bringing it to a record $3.7 billion—a 2,700% increase since 2019.
  • Additionally, Kentucky added 6,400 jobs filled in June, bringing the total to 2,015,600.
  • Kentucky recently received credit rating upgrades by both Fitch Ratings and S&P Global Ratings, to AA and A+, respectively.

Royden Durham, Lead Portfolio Manager of Aquila Churchill Tax-Free Fund of Kentucky, was referenced as saying that these results highlighted the State’s efforts to improve its fiscal health and growth in different areas of the economy, particularly in the logistics industry.

Mr. Durham believes that new developments in the auto industry are likely to contribute to growth and bring higher paying jobs. For example, Ford Motor Company, in a joint venture with SK On, created BlueOval SK—a $5.8 billion investment to produce batteries for Ford and Lincoln electronic vehicles at new facilities in Glendale, Kentucky. And Toyota Motor Corporation announced that it will begin producing their first U.S.-built all-electric SUV at its assembly plant in Georgetown, Kentucky.

He also feels that recent credit rating upgrades for Kentucky by key rating agencies reflect the State’s continued economic improvements. In June, S&P Global Ratings upgraded Kentucky’s issuer credit rating to A+ (from A). Just a month prior, Fitch Ratings raised Kentucky’s issuer default rating (“IDR”) to AA (from AA-), and upgraded the State’s annual appropriation-backed debt and other IDR-linked debt to AA- (from A+). Both rating agencies assigned a Stable outlook for Kentucky.

This is all very encouraging news for the Bluegrass State. We will continue to monitor these and other local developments. Having portfolio management teams located in the states where they invest enables Aquila Group of Funds to gain on-the-ground insights that may impact our mutual funds and shareholders.

 

This information is general in nature and is not intended to provide investment, accounting, tax or legal advice. It is not intended to represent a recommendation or solicitation related to any particular investment, security or industry sector. The opinions shared are those of the portfolio manager and do not necessarily reflect those of the Investment Adviser of the Fund.

Independent rating services (such as Standard & Poor’s, Moody’s and Fitch) assign ratings, which generally range from AAA (highest) to D (lowest), to indicate the credit worthiness of the underlying bonds in the portfolio. Where the independent rating services differ in the rating they assign to an issue, or do not provide a rating for an issue, the highest available rating is used in calculating the Fund’s allocations by rating.

Mutual fund investing involves risk; loss of principal is possible. Investments in bonds may decline in value due to rising interest rates, a real or perceived decline in credit quality of the issuer, borrower, counterparty, or collateral, adverse tax or legislative changes, court decisions, market or economic conditions. State-specific fund performance could be more volatile than that of funds with greater geographic diversification.

Before investing in any mutual fund offered by Aquila Group of Funds, carefully read about and consider the investment objectives, risks, charges, expenses, and other information found in the Fund’s prospectus. The prospectus is available from your financial professional, by clicking here, or by calling 800-437-1020.