California Wins Rating Upgrade From Fitch on Improving Economyby
GO debt jumps to fourth-highest level of investment grade
Boost applies to Aug. 30 sale of $2.7 billion of securities
California had its credit rating raised by Fitch Ratings, elevating the largest U.S. state to the fourth-highest level of investment grade because of the strength of its economy and strong budget management.
Fitch lifted the rating on the state’s $74.9 billion of general-obligation bonds and its issuer default rating by one step to AA-, seven levels above junk. The outlook is stable. The rating also applies to $2.7 billion of GO bonds that California plans to sell via negotiation on Aug. 30. Most of that deal is for refunding, according to Fitch.
“The ’AA-’ rating reflects California’s large and diverse economy that supports strong, albeit cyclical revenue growth prospects, solid ability to manage expenses through the economic cycle, and a moderate level of liabilities,” according to a statement from Fitch on Friday. “California is fundamentally better positioned to withstand a future economic downturn than has been the case in prior recessions.”
The state’s economy is “unmatched” among the 50 U.S. states, according to Fitch, which cited its size and diversity. The higher rating also comes after Fitch revised its criteria for U.S. state and local governments which was released in April.