California issued almost $1 billion in bonds to fund various capital improvements across the state.
The bonds, which are federally taxable, mature between 2028 and 2041. They received a rating of Aa2 from Moody’s Investors Service, AA- from S&P Global Ratings, and AA from Fitch Ratings.
The rating reflects “the state’s large and diverse economy, which supports strong, albeit cyclical, revenue growth prospects, a solid ability to manage expenses through the economic cycle and a moderately low level of long-term liabilities,” according to Fitch.
The issuance comes as California increasingly turns to debt to tackle its biggest issues.
The bond proceeds will finance voter-approved capital projects. Funded initiatives include stem cell research, high-speed rail, affordable housing, water security, disaster preparedness, and other projects.
Next year, with three of the state’s largest-ever housing bonds on the ballet, California voters will decide just how much debt they are willing to take on. The three housing proposals alone amount to $35 billion. One of the proposed bonds, a $20 billion issuance by the Bay Area Housing Finance Authority, would be four-times greater than any previously issued housing bond.
As a whole, state lawmakers are considering a whopping $80 billion in bonds. If they are all passed, the year’s bond issuances would mark the highest annual addition to the state’s debt load since 1980.
California has the largest economy of any U.S. state; its estimated GDP of $3.7 trillion is larger than all but four countries. The bonds sold this week are general obligations of the state, backed by its full faith and credit.