S&P Takes CalSTRS Off Negative Watch

Following up on a recent ratings action for California general obligation bonds, Standard & Poor’s Monday removed its AA issuer credit rating on the California State Teachers Retirement System from negative watch while affirming the rating.

Last week, the agency removed California GO bonds from negative watch, a designation that covers potential rating actions over the near term.

Standard & Poor’s rating criteria for pension funds limits a pension fund rating to being no more than three notches higher than the GO rating on the fund’s governmental sponsor.

California is rated A with a negative outlook, which covers the longer term, and that outlook also applies to CalSTRS.

“The negative outlook on the California State Teachers Retirement System reflects what we see as the negative outlook on the state of California’s GO bonds,” Standard & Poor’s credit analyst David Hitchcock said in a statement.

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