Standard & Poor's Corp. yesterday affirmed its A-plus rating on California general obligation bonds, and assigned an SP-1 rating to the state's $2 billion revenue anticipation note sale expected this week.
Standard & Poor's' rating actions follow those of Moody's Investors Service and Fitch Investors Service, which last Thursday affirmed their double-A ratings on the state's $17.6 billion of GO bonds outstanding.
Moody's assigned the short-term notes a MIG-1 rating, and Fitch on Monday assigned the notes an F-1-plus.
In a release, Standard & Poor's said California's long-term rating outlook remains stable, reflecting the long-term economic viability of the state, which is offset by its near-term budgetary stress.
The SP-1 rating, while a notch below Standard & Poor's' highest short-term credit rating of SP-1-plus, is the same rating the agency assigned last October to California's $5 billion note sale for fiscal 1993.
The agency, which lowered California's GO debt rating to A-plus from AA in July 1992, most recently assigned its highest SP-1-plus rating to California notes in fiscal 1992.
The traditional annual revenue anticipation note sale is intended to finance the state's ongoing cash now needs during the fiscal year. The notes, scheduled to be sold through negotiation by a Lehman Brothers-led syndicate, will mature on June 28, 1994.
About $200 million to $400 million of the notes may be a derivative product, which would be swapped through an intermediary into a fixed rate, Steven Zimmermann, a managing director for Standard & Poor's, said.
State Treasurer Kathleen Brown said she was heartened that the three rating agencies sustained California's GO credit rating.
In a prepared statement, Brown said the ratings confirm that "California may not have produced the best budget possible, [but] it has in place a solid budget that underscores California's basic creditworthiness."
On June 30, Gov. Pete Wilson signed the state's fiscal 1994 budget bill, which authorized $38.5 billion in general fund spending, down 6.3% decline from fiscal 1993.
The governor's approval marked the first time since 1986 that a budget has been enacted before the start of the new fiscal year.
Despite the state's continuing, severe economic downturn and concerns about its reliance on off-budget loans to schools, "we were able to convince the agencies that this was a budget that deserved the maintenance of the state's current ratings," Brown said in the release.
Standard & Poor's yesterday also assigned a provisional A-minus rating to $375 million in California State Public Works Board lease revenue refunding bonds for various University of California projects. Brad Altman is a reporter for California Public Finance, a Bond Buyer newsletter