The Standard & Poor's (S&P) ratings agency has upgraded its ratings for the only state-owned bank in the US.

This means the Bank of North Dakota (BND), which provides financial support for the state's public, agricultural, commercial and industrial sectors, will be better able to provide letters of credit (L/Cs) for its customers.

Ratings review

Although North Dakota guarantees BND's deposits, it does not extend such support to the bank's L/Cs, loans and other financial instruments.

This prompted the bank's management to seek a more detailed ratings agency review of its reserves, earnings and management.

L/C benefits

The improved S&P ratings that resulted from such a review should be useful for BND's L/C offerings.

These include the L/Cs the bank provides to private banks and government agencies to guarantee that a loan or bond issue will be paid off.

A BND-issued L/C backed by its new stronger rating should also help lower the interest costs of public works and private financing in North Dakota's agricultural, commercial and industrial sectors.

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