Tobacco Fallout Cited as Moody's Lowers $9.5B in California Rans

Finestone, Deborah
April 2003
Bond Buyer;4/8/2003, Vol. 344 Issue 31610, p1
Trade Publication
Financial ratings company Moody's Investors Service Inc. has cut the rating on 9.5 billion dollars of California revenue anticipation notes scheduled to mature June 20, 2003, saying it doubted the state will be able to sell a planned 2 billion dollar tobacco securitization by then in order to raise cash to help redeem all the notes. The later-maturing notes, also sold during Fall 2002, were originally assigned a lower rating by Moody's because it was uncertain how much cash the state would have on hand by the later date and it was possible they would need to be refinanced through the sale of revenue anticipation warrants. The state's decision to delay pricing its tobacco bonds, which had been scheduled for April 15, shows that issuing the bonds became very unattractive from a pricing and net-proceeds perspective. The controller and treasurer continue to work on maintaining the state's cash-flow needs and discussing when and if the state can issue the tobacco bonds, according to the treasurer's office.


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