CA's dubious distinction

For a while we were neck-and-neck with Louisiana, but California can now lay claim to the worst credit rating of all 50 states. Citing the budget impasse, S&P lowered the rating on the state’s $46 billion in general obligation bonds to "A" from "A-plus." Most states are rated either "AA" or "AAA." S&P added that in spite of California having strong, long-term fundamentals, "we judge prospects for an imminent or brisk economic and revenue recovery to be unlikely." From Tom Petruno's Money & Co.:

Despite its money woes, California can't arbitrarily decide to default on its debts; the state Constitution mandates that debt principal and interest must be paid as promised. But a lower credit rating can lead investors to demand higher interest rates on new bonds the state sells for infrastructure projects, or on short-term debt issued for cash management purposes.

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Mark Lacter
Mark Lacter created the LA Biz Observed blog in 2006. He posted until the day before his death on Nov. 13, 2013.
 
Mark Lacter, business writer and editor was 59
The multi-talented Mark Lacter
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