Post by dgriffin on Jun 19, 2009 14:45:40 GMT -5
Moody's warning on California debt stuns state
Fri Jun 19, 2009 3:18pm EDT
SAN FRANCISCO (Reuters) - California, which is struggling to close a $24.3 billion budget gap, faces the prospect of a "multi-notch" downgrade in its credit rating if the state's legislature fails to act quickly to produce a budget, Moody's Investors Service warned on Friday.
Moody's decision to place California's general obligation debt on alert for a possible "multi-notch" downgrade stunned state officials.
"If the legislature does not take action quickly, the state's cash situation will deteriorate to the point where the controller will have to delay most non-priority payments in July," Moody's said in a statement.
"Lack of action could result in a multi-notch downgrade," Moody's added.
A downgrade could push California's borrowing costs up at time when state officials expect to issue up to $9 billion in revenue anticipation notes as soon as possible after a budget agreement is notched -- a deal whose timing is in doubt.
Moody's said California's leasing debt and other state-related debt are also on review, affecting a total of $72 billion of debt.
www.reuters.com/article/domesticNews/idUSTRE55I52L20090619
Could New York be far behind?