The Buzz: California is assured its U.S. Treasury bonds will get paid

October 17, 2013 

Budget Battle

House Speaker John Boehner arrives for a meeting with House Republicans on Wednesday as Congress prepared to end the partial federal shutdown.

CAROLYN KASTER — The Associated Press

  • By The Numbers

    State officials have directed $381 million to schools to retrofit aging campuses for energy efficiency, according to a list the Department of Education released this week. The money comes from voter-approved Proposition 39, which raises taxes on out-of-state corporations. The measure was pushed by billionaire Tom Steyer and Sen. Kevin de León, a Los Angeles Democrat. His hometown includes California’s largest school district, Los Angeles Unified, which will get the biggest chunk of the funds – more than $26 million.

    – Laurel Rosenhall

It’s the kind of routine financial transaction that would typically go unnoticed.

But by sheer coincidence, California has $1.5 billion in U.S. Treasury bonds coming due today – the day that the Treasury has said it would reach its debt limit if the federal budget impasse continued.

The date’s significance is uncertain. In placing the nation’s credit rating on a negative watch this week, the ratings house Fitch Ratings noted “the Treasury would still have limited capacity to make payments” but may be unable to prioritize debts.

What would that mean for California and its bonds?

Tom Dresslar, a spokesman for state Treasurer Bill Lockyer, said Tuesday that the state was “extremely confident” it would get paid.

“The banks we work with have been in contact with folks in the U.S. Treasury Department,” Dresslar said, “and they assure us that we’re going to get all of our money.”

About 59 percent of California’s $56.6 billion Pooled Money Investment Account is invested in U.S. Treasury bonds, he said. The account is used for state cash flow and other purposes.

– David Siders

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