WASHINGTON -- Standard & Poor's Corp. yesterday placed California's lease revenue bonds on Credit Watch with negative implications, and Moody's Investors Service voiced "serious concerns" that the state's prolonged budget crisis has left it with no clear legal authority to appropriate lease payments.

The rating agencies warned that the impasse may force the state to use reserve funds to make bond payments due Sept. 1 on issues totaling almost $2 billion, violating the state's legal covenant to appropriate payments.

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