State Of California

SACRAMENTO — State Treasurer Bill Lockyer is urging Wall Street’s embattled credit-rating firms to give California a higher bond rating, arguing that an upgrade could save billions of dollars in interest payments over several decades. In a letter sent to the three top rating firms today, Lockyer and the treasurers from ten other states argue that state and local governments have been unfairly held to a higher standard than corporate bond issuers. State and local governments rarely default on bonds, said Lockyer, but recently complicated private-sector debt instruments given top ratings have gone sour in a market struggling with the subprime-mortgage crisis. If $61 billion in California bonds approved by voters but not yet issued received a top rating of AAA, Lockyer estimated, taxpayers could save up to $5 billion in interest as the bonds are paid off over 30 years. After major budget actions, state officials brief the rating firms to plead their case for a good rating, sometimes in trips to Wall Street. Currently, California’s bond rating is among the lowest of any state (A+ from Standard & Poor’s and Fitch and A1 from Moody’s), mainly because California has had a chronic deficit for seven years. More California News

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