the visible hand

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California: Teetering closer to junk

Posted by ecoshift on July 7, 2009

California: Teetering closer to junk
By Tami Luhby, CNNMoney.com senior writer
Last Updated: July 6, 2009: 7:17 PM ET

NEW YORK (CNNMoney.com) — California’s bond rating is far from golden.

Citing the Golden State’s ongoing budget upheaval, Fitch Ratings on Monday downgraded California’s long-term debt to BBB, one category above junk bond status. The next step is BBB- before the state’s bonds would be considered speculative debt.

Fitch also maintained its so-called negative outlook on California. “[I]nstitutional gridlock could persist, further aggravating the state’s already severe economic, revenue and liquidity challenges,” Fitch wrote.

The agency had downgraded the state to A- on June 25.

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