FITCH RATINGS REMOVES DING FROM STATE'S CREDIT.Byline: Harrison Sheppard Sacramento Bureau Following the signing of Gov. Arnold Schwarzenegger's $105 billion budget, a Wall Street rating firm Monday brightened the outlook slightly for California's credit rating. Fitch Ratings Fitch Ratings An international rating agency for financial institutions, insurance companies, and corporate, sovereign, and municipal debt. Fitch Ratings has headquarters in New York and London and is wholly owned by FIMALAC of Paris. removed a ``rating watch negative'' from California, a designation which had meant the state's credit was in danger of getting worse. Fitch kept the state's relatively low BBB BBB A medium grade assigned to a debt obligation by a rating agency to indicate an adequate ability to pay interest and repay principal. However, adverse developments are more likely to impair this ability than would be the case for bonds rated A and above. rating, but removing the negative watch means the situation has at least stabilized sta·bi·lize v. sta·bi·lized, sta·bi·liz·ing, sta·bi·liz·es v.tr. 1. To make stable or steadfast. 2. . Fitch analyst Richard Raphael noted that, while the budget and the governor's $15 billion bond measure passed by voters in March took care of short-term cash problems, there are still long-term structural deficit issues to be addressed. ``It's poised to improve, but on the other hand, we'll have to see how things develop in terms of revenue, the economy and what measures are put into place to reduce this imbalance imbalance /im·bal·ance/ (im-bal´ans) 1. lack of balance, such as between two opposing muscles or between electrolytes in the body. 2. dysequilibrium (2). ,'' Raphael said. State Treasurer Noun 1. state treasurer - the treasurer for a state government financial officer, treasurer - an officer charged with receiving and disbursing funds Phil Angelides Philip Nicholas "Phil" Angelides (IPA: æn.dʒε.'lid.ɪs) (born June 11, 1953 in Sacramento, California), is a California politician who was California State Treasurer and the unsuccessful Democratic nominee for Governor of California in the 2006 elections. , Schwarzenegger's leading critic, noted that Fitch did not upgrade the state's actual credit rating, which is among the lowest of any state. ``Today's action by Fitch reaffirms what the financial markets and credit rating agencies Credit Rating Agencies Firms that compile information on and issue public credit ratings for a large number of companies. have been saying for some time now: The state's credit rating will not be fully restored until the budget is truly balanced and the state's deficit spending Deficit spending When government spending overwhelms government revenue resulting in government borrowing. deficit spending Expenditures that are in excess of revenues during a given period of time. is brought to an end,'' Angelides said in a written statement. ``Unfortunately, this year's budget will hurt our efforts to raise California's credit rating.'' Fitch is one of the three major Wall Street credit rating agencies. The other two, Moody's and Standard & Poor's, have not reacted to the July 31 budget signing. Moody's upgraded California to A3 in May with the release of the governor's proposed budget. Standard & Poor's has kept the state's rating at BBB, upgrading it with a positive credit watch in May. The Fitch move involves $33.5 billion in general obligation bonds and $10 billion in bonds issued by about a dozen state agencies. ``I think it's another mile marker in terms of measuring progress that we're making toward fiscal stability and structural balance,'' said H.D. Palmer, a spokesman for the governor's Department of Finance. ``We've seen positive movement by all three of the Wall Street rating agencies this year,'' Palmer added. ``(But) clearly there's still work to do.'' Harrison Sheppard, (916) 446-6723 harrison.sheppard(at)dailynews.com |
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