California economy lift sparks debt upgrade

A boost in tax revenues and employment has prompted an upgrade in the state’s debt

Rating agency Moody’s has upgraded California’s credit rating for the first time in nearly four years. Moody’s now rates California’s general obligation bonds—bonds backed by tax revenues—A3 with a positive outlook, up from Baa1.

However, California’s credit rating is still lower than that of any other state. The bursting of the dotcom bubble, the energy crisis, national recession and gridlock in state government created massive budget deficits and prompted Moody’s to drop California’s rating