Don Kenobi
/ 83.5.218.* / 2009-05-20 08:55
The three major credit rating companies, citing the magnitude of California’s deficits, reduced the grades on more than $46 billion of bonds in February and March. Now, California’s full faith and credit pledge is rated A by Standard & Poor’s and an equivalent A2 by Moody’s Investors Service, five grades below the top investment ranking. California is the lowest-rated U.S. state.
A California general obligation bond maturing in 2038, which traded for as little as 81.5 cents on the dollar on Dec. 4, went for 96.4 cents to yield 5.5 percent on May 19, according to Municipal Securities Rulemaking Board data. That compares with 5 percent for top-rated municipal general obligation bonds, as measured by a Municipal Market Advisors index.