Standard & Poor’s, citing a pickup in the state’s economy and the enactment of a 2005 budget, raised California’s credit rating three notches to A from BBB. S&P also projected a “stable” outlook going forward.
California started on the road to recovery when voters approved $15 billion in economic recovery bonds in March ($11 billion have been issued to date). The state has utilized the bond proceeds to repay $14 billion in short-term notes that matured in June and retained the authorization for the additional $4 billion to address any unforeseen budgetary shortfalls over the next two years.
In May, Moody’s upgraded California’s credit rating to A3 from Baa1.