A major Wall Street credit rating firm has downgraded California€™s creditworthiness to one of the lowest rankings among the 50 states.
The decision today by Moody€™s Investor€™s Service could force the cash-strapped state to pay higher interest rates on its bonds as it tries to eliminate a state budget deficit that could reach nearly $35 billion over the next 17 months. Moody€™s says it´s lowering its rating on California€™s general obligation bonds from A-one to A-two. Only two other states, New York and Louisiana, have that a ranking that low. Moody€™s also dropped ratings for five and a half billion dollars in California lease revenue bonds from A-two to A-three. Those rankings generally are one notch below a state€™s general obligation bond rating.
The investment firm made no change in its ratings on California€™s short-term borrowing.