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March 20, 2009

Moody's becomes latest to downgrade California bonds

Moody's Investors Service dannounced Friday that it was downgrading California's general-obligation bonds to A2 from A1, meaning the state will have to pay higher interest rates to investors. California now has the distinction of being the lowest rated state by all three major ratings services. Moody's became the third ratings house to downgrade California's general-obligation bonds this year, following similar moves by Standard & Poor's and Fitch Ratings. State Treasurer Bill Lockyer is planning to sell $4 billion in general-obligation bonds to replenish the state's Pooled Money Investment Account and help pay for construction projects around the state.

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