UPDATE 1-Fitch upgrades California ERBs to AA
SAN FRANCISCO Oct 16 (Reuters) - Citing California's improving economy, Fitch Ratings raised its rating on Wednesday for $4.58 billion of the state's outstanding economic recovery bonds to AA from A-plus.
"Pledged revenues have continued to gain strength reflecting the gradual improvement of the state's economy, resulting in higher coverage and accelerating the early retirement of the bonds," Fitch said in a statement.
It said the outlook on the debt is stable.
Security for the bonds, known as "ERBs," is provided by a dedicated one-quarter-cent sales tax. The debt also carries a general obligation pledge of the state.
California voters in 2004 authorized the state to issue up to $15 billion of the debt. The state sold $10.9 billion of the bonds in its 2004 fiscal year and $3.2 billion of the bonds in its 2008 fiscal year to raise cash and to help balance its budgets.
Fitch last week affirmed its A rating on approximately $74 billion of California's outstanding general obligation bonds. Fitch had raised its rating on the debt from A-minus in August.
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