CALIFORNIA NEAR BANKRUPTCY?

January 14, 2004

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Californa Governor Schwarzenegger says Bond Needed to Avert `Bankruptcy.’

California Governor Arnold Schwarzenegger said voters should approve a planned $15 billion bond sale to prevent the most populous state from facing “bankruptcy” in June.

“We put measures on the March ballot that, if passed by the people, will save our state from a June bankruptcy,” Schwarzenegger said at the Capitol in Sacramento. “June is the month when billions of dollars in past loans come due and the financial house of cards built over the last half decade is set to collapse.”

California has the highest borrowing costs and the lowest credit rating of U.S. states. Last month, Moody’s Investors Service lowered the rating on $30 billion of state debt to Baa1, the third lowest of 10 investment grades. That gives the state, home to companies such as Intel Corp. and Cisco Systems Inc., the same credit rating from Moody’s as Thailand.

SOURCE: Bloomberg.com