Agencies’ Double-A Ratings of State Bonds Calm Fiscal Fears

Two key bond rating agencies confirmed their double-A ratings of California bonds Thursday, erasing fears that the state’s fiscal troubles and under-performing economy would lead to lower ratings--and higher interest costs on state borrowings.

Moody’s Investors Service and Fitch Investors Service both confirmed their ratings of California’s general obligation debt, which have been in effect since last July.

Moody’s also gave its highest rating to $2 billion in short-term state revenue anticipation notes that will be sold next week. Fitch has not yet issued its rating on the notes.

The announcements followed talks with investors and the ratings agencies this week by Treasurer Kathleen Brown and other state officials.

In a statement explaining its decision, Moody’s lauded actions taken by the state over the last three years that it said “have dramatically restrained expenditure growth.” But the agency said cutbacks in public services under the 1993-94 budget “will have a negative impact on the state’s business climate and quality of life.”