SAN FRANCISCO, June 7 Moody's Investors Service
upgraded on Friday by one notch its rating on $5.2 billion of
outstanding California Economic Recovery Bonds to Aa2 from Aa3,
citing two years of strong growth in the revenue used to pay the
Moody's in a statement added that the improved rating also
reflects the debt's "strong legal structure and healthy coverage
levels based on conservative revenue forecasts, as well as the
expectation that the revenue growth will continue to be strong
for the life of the bonds."
Moody's outlook on the debt, supported by pledged sales-tax
revenue, is stable and said it expects the bonds to be fully
redeemed by 2017. California voters in 2004 authorized the state
to issue up $15 billion of the bonds. The state sold $10.9
billion of the debt 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.