S&P; Boosts California’s Bond Rating

Credit-rating agency Standard & Poor’s on Tuesday raised its rating on California’s general obligation bonds, citing the state’s strong economy and “return to structural fiscal balance” in the state budget. The rating on about $20 billion in outstanding bonds was boosted to “AA-minus” from “A-plus.” S&P;’s rating of “AA” defines a bond as “high quality,” whereas an “A” rating is considered “upper medium grade.” The highest rating is “AAA.” S&P; noted that the state’s 2000 budget “was adopted on time for the first time in a number of years and includes economic assumptions more conservative than that of most outside forecasters.” Still, S&P; said the state’s financial reserve levels are “relatively small,” an apparent factor in keeping the state’s credit rating below the highest possible grade.