featured graphic for California State Treasurer Fiona Ma

California’s bond rating gets upgraded

In a nod of approval for how its finances are being managed, California’s credit rating was upgraded by the credit rating agency Fitch Ratings. General Obligation (GO) bonds went up to AA.

Fitch said the upgrade of California’s GO and Issuer Default Rating to AA from AA- reflects improved fiscal management that has become institutionalized across administrations, which in Fitch’s view allows it to better withstand economic and revenue cyclicality.

Fitch assigned the AA rating to $700 million various purpose GO bonds and $1.6 billion various purpose GO refunding bonds that the State Treasurer will be selling September 5, 2019. The proceeds will be used to refund existing GO debt and finance capital projects.

In its announcement, Fitch said the state has used temporary tax increases, underlying revenue growth, and a disciplined approach to limiting on-going spending growth to enhance its ability to maintain resiliency through the economic cycle.

“The state eliminated the overhang of budgetary borrowing that had accumulated through two recessions and continues to set-aside funds in the budget stabilization account,” Fitch Ratings said.

Treasurer Fiona Ma said the announcement is an important affirmation that the Legislature and the Governor are making the right decisions.

“Growing the State’s rainy day fund and fiscal discipline will keep the state resilient,” she said. “So long as we hold fast to a policy of fiscal restraint we will remain on the right track and as ready as we can be for whatever the global economy has in store.”

This article was released by the California State Treasurer’s Office.