Fitch slashed its rating on California’s general obligations bonds to triple B – two notches above junk – on Monday, after the state was forced to issue IOUs for certain payments while it frantically tries to agree a budget, the FT reported. Further downgrades are possible, Fitch said, if legislators and governor Arnold Schwarzenegger do not end a stalemate over how to close a $26bn budget gap. Separately, the WSJ reported that a group of the biggest US banks said they would stop accepting California’s IOUs on Friday, adding yet more pressure on the state.

This entry was posted by Stacy-Marie Ishmael on Tuesday, July 7th, 2009 at 4:25 and is filed under Capital markets. Tagged with arnold schwarzenegger, california. Edit this entry.