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California Receives S&P Highest Rating on Short Term Notes

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(Sacramento, CA)
Thursday, August 2, 2012

The rating is called SP1+…and it's good news for California. But before you get too excited…

Petek: "It doesn't mean that the state has solved its longer term more structural budget problems."

That's S&P analyst Gabriel Petek. Instead, he says the rating means the agency believes California has more than enough money to pay back $10 billion in short term bonds.

Petek: "We have a low bond rating on the state's general obligation bond…but these are sort of like, can be kind of thought of like a payday loan."

Meaning the state knows it will collect the bulk of its revenue later in the fiscal year - just like that future paycheck - but expenses come earlier.

And Petek says even if voters reject Governor Jerry Brown's tax initiative, based on S&P analysis, California can still repay the loans.
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