California had the credit rating on its general-obligation bonds raised by Standard & Poor’s for the first time since 2006 as tax increases championed by Governor Jerry Brown bolster the state’s fiscal outlook.
The move by S&P affects $73 billion of debt and lifts the state’s credit grade one step to A, the sixth-highest level, according to Gabriel Petek, a San Francisco-based analyst at the company. California’s outlook was moved to stable from positive, and the grade on its lease-revenue bonds increased to A- from BBB+, said Petek.
Brown, a Democrat, this month proposed a budget for the fiscal year that begins July 1 that he expects will leave the state with an $851 million surplus, the first in almost a decade. He persuaded voters in November to approve higher taxes on income and sales.
“S&P’s actions recognize the strides California has made toward improving its fiscal management, producing a sounder budget and getting itself on a more sustainable financial path,” Tom Dresslar, a spokesman for California Treasurer Bill Lockyer, said in an interview.
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