UPDATE 1-Moody's raises San Francisco, California to Aa1

Tue Feb 5, 2013 11:11am EST

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Feb 5 (Reuters) - Moody's Investors Service on Tuesday
raised the City and County of San Francisco, California's
general obligation bond rating to Aa1 from Aa2 with a stable
outlook.
    The upgrade, which affects about $2.2 billion of debt,
"recognizes the quality of the city's tax base and economy,
which have exhibited notable strengths through the recession and
are solidly accelerating from the downturn," Moody's said in a
statement.
    The upgrade also reflects Moody's "changed view of the
likelihood of default on a California local government's GO bond
relative to obligations secured by its general resources," the
rating agency said. 
    "This new view has generally resulted in a widening of our
rating distinction between GO ratings and lease-backed
obligation ratings," Moody's said.
    Previously rated A1 real property lease-backed obligation
bonds were upgraded to Aa3, while existing Aa3 bonds have been
affirmed, the rating agency said.
    The stable long-term rating outlook underscores the city's
large, diverse tax base which is fundamentally solid and its
financial position will likely remain "narrower than typical for
the rating level but stable."
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