California on Thursday prepared to suspend $5bn in financing for schools, roads, power projects and levee repairs after the state’s mounting budget crisis led Standard & Poor’s to downgrade some of its short-term debt. In the past, California has been able to raise money in the bond markets to pay for infrastructure projects. However, with the markets effectively closed to the state, it will use funds earmarked for infrastructure to cover short-term obligations. Bill Lockyer, California’s treasurer, told the Financial Times the state planned to shift $5bn in infrastructure funds to short-term obligations in the near-term. He said it was working on plans to re-allocate an additional $7.5bn in such funds.

This entry was posted by Stacy-Marie Ishmael on Friday, December 12th, 2008 at 4:00 and is filed under Capital markets. Tagged with california. Edit this entry.