Fitch Ratings Monday afternoon revised California's outlook to positive from stable, while affirming its A-minus rating on about $72.7 billion in outstanding general obligation debt.
The action comes in advance of next week's scheduled issuance and remarketing of $2.7 billion in California GOs.
"The positive outlook reflects the fiscal management improvements instituted by California in recent years, which when combined with two successive years of structural budget progress have enabled the state to materially reduce budgetary borrowing," Fitch said in a news release. "Eventual rating action would be linked to the state's demonstrated willingness to restrain spending growth and progress reducing budgetary obligations."
Fitch's revised outlook also applies to debt rated on par with state GOs, including Cal-Mortgage Loan Insurance Division bonds and California Statewide Community Development Authority revenue bonds for the State of California Proposition 1A Receivables Program.
The outlook revision to positive also applies to a variety of BBB-plus rated appropriation bonds of the state, exclusing BBB-plus rated appropriation bonds of the California Judgment Trust, Shafter Joint Powers Financing Authority, and Taft Public Finance Authority, which retain a stable outlook.
Standard & Poor's upgraded California to A from A-minus in January. Moody's Investors Service rates California GOs A1.