MOODY'S downgrades California's credit rating over power crisis
Tuesday, May 15th 2001, 12:00 am
By: News On 6
SACRAMENTO, Calif. (AP) _ California's credit rating was downgraded by a major Wall Street agency Tuesday because of the power crisis' increasing drain on the state's finances.
Moody's Investors Service lowered its rating on $19.8 billion of state general obligation bonds from Aa3 to Aa2, and dropped the rating on $5.7 billion in lease revenue bonds from Aa3 to A1.
The action put California among the 12 lowest states in Moody's ratings.
California has committed itself to spend billions buying electricity on behalf of its two biggest utilities, which have run up big losses from buying wholesale power and have all but exhausted their own credit.
Standard & Poors, another major rating agency, downgraded the state's credit rating in April, placing the state in the nation's bottom three, equal to Hawaii and slightly better than Louisiana.
A lower credit rating makes it more expensive for the state to borrow money.
California's rating was last downgraded in 1994, when the state was emerging from a long recession and recovering from a $14 billion deficit. It took the state more than five years to recover a high-quality rating.