Moody’s Raises Rating on California Bonds

Moody’s Investors Service raised its credit rating on California bonds, reflecting a substantial reserve for the state budget and improvement in the state’s economy. Moody’s raised its assessment of the credit-worthiness of about $14.6 billion worth of general obligation bonds--bonds requiring voter approval--to Aa3 from A1. It also boosted its rating for $5.6 billion of bonds released through the Board of Public Works to A1 from A2. The higher rating means the state pays less interest to borrow money. The state budget, as signed by the governor, included a $1.2-billion reserve. Moody’s noted that California’s Aa3 rating is lower than those of most large industrialized states. But its rating is higher than that of New York, which is an A2.