The board of the California Statewide Communities Development Authority voted to join state Treasurer Bill Lockyer’s efforts to change the rating system for municipal bonds.
Lockyer has been railing against what he sees as a double standard from rating agencies, arguing that municipal bonds get lower ratings than corporate bonds that default at much higher rates.
The conduit bond issuer’s action last Friday is an important event, Lockyer spokesman Tom Dresslar said in an e-mail.
“We believe the development is significant, in part because CSCDA is a joint-powers authority whose member agencies include all 58 California counties and 336 cities,” he said. “Additionally, CSCDA’s co-founders and sponsors are the two statewide groups that represent counties and cities — the California State Association of Counties and the League of California Cities. Basically, CSCDA’s action shows California’s local governments agree the current bond rating system harms taxpayers, and that the reforms advocated by Lockyer and others provide the solution.”
California is rated A1 by Moody’s Investors Service and A-plus by Standard & Poor’s and Fitch Ratings.