The Buzz: California is assured its U.S. Treasury bonds will get paid
10/17/2013 12:00 AM
10/17/2013 12:14 PM
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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