S&P downgrades California's bonds citing energy troubles
Wednesday, April 25th 2001, 12:00 am
By: News On 6
SACRAMENTO, Calif. (AP) _ A major credit rating agency has downgraded California's state bonds, citing the financial drain from its continuing energy crisis.
``The downgrade reflects the mounting and uncertain cost to the state of the current electrical power crisis, as well as its likely long-term detrimental effect on the state's economy,'' Standard & Poors said Tuesday.
The state's ability to repay its debts, while still considered adequate, has been reduced, S&P said in dropping the rating on California's general obligation bonds by two notches from AA to A+.
The agency said the rating was not reduced further because of California's diverse economy and a proposed revenue bond slated to reimburse the state's treasury. S&P said a further downgrade could occur if California does not follow through on plans to issue more than $10 billion in revenue bonds to pay off its energy-related debts.
The agency put the state's general obligation bonds on a credit-watch ``with negative implications'' Jan. 19, shortly after California began buying power for its two largest utilities, Southern California Edison and Pacific Gas and Electric Co.