And yes I know that comping Greece's BBB+ to Cali's A- is an olives to oranges comparison.
Sovereign vs. muni.
[the Greek paper being sovereign might be safer -ed.]
California downgraded by S&P, weighing on state's bonds
Standard & Poor's said Wednesday it downgraded California's credit rating to A-minus as the state faces another multi-billion-dollar budget gap for the current fiscal year and has appealed to federal lawmakers for assistance.
The cost of buying insurance against the risk California's government would default on its debt rose after the downgrade, but not by much, indicating many investors were well aware of the state's financial woes.
S&P maintained its negative outlook on the states $63.9 billion in general obligation debt, indicating more downgrades are possible.
The state's previous rating was A, already the lowest in the nation, an S&P spokeswoman said. S&P last downgraded California last February....MORE
From Bloomberg via BusinessWeek:
California Creditors See IOUs With Schwarzenegger Missing Obama
California’s hopes are fading for federal help in closing a projected $19.9 billion deficit that has caused the lowest-rated state’s borrowing costs to rise 26 percent in three months.
“We recognize they have enormous problems,” David Axelrod, senior adviser to President Barack Obama, said in an interview. “But we can’t solve all of those problems from Washington.”
Investors are growing more concerned that California, the world’s eighth-largest economy, will repeat last year’s fiscal crisis that forced it to use IOUs to pay bills. With Governor Arnold Schwarzenegger seeking $6.9 billion in federal assistance to narrow the deficit, the extra interest paid on the state’s 10-year bonds over AAA-rated municipal securities has risen to 1.34 percentage points from 1.06 points in three months.
Schwarzenegger’s plea for help may become a test case for Obama, who last year called the 62-year-old Republican governor “an outstanding partner with our administration.” Dozens of states face budget shortfalls amid the worst recession since the Great Depression, and at least 36 have already reduced fiscal 2010 expenditures, according to the National Association of State Budget Officers.
“There’s a huge amount of concern about California,” said Howard Cure, who helps handle municipal-bond investments for Evercore Wealth Management in New York, which oversees $1.5 billion. “There’s a relatively large reliance on hoping that the federal government will send extra money their way. It’s going to be very politically difficult for that to happen.”>>>MORE