California's GDP would make it the eighth largest economy in the world. It's current account deficit is $26 Billion [or $15 billion if you throw in a few accounting tricks].
BBR's CA Bond Ratings looking forward twelve months: 100/100. We expect CA to substantially meet all of its fiscal obligations by doing whatever it takes to keep their ratings.
BBR's CA Bond Ratings looking forward five years: 95/100. This could change depending on the economy of course. We expect California to meet its fiscal obligations. However, there is a 5% chance that California could delay payments on its bonds by more than a month in the next five years.
BBR's CA Pension Liability Index in the next twelve months: 100/100. CA will meet all of its pension obligations in the next twelve months.
BBR's CA Pension Liability Index in the next five years: 95/100 CA will default on or modify the benefits to at least five percent of its work-force in the next decade.
BBR's CA Pension Liability Index in the next ten years: 80/100. CA will default on or modify the benefits to at least twenty percent of its work-force in the next decade.
BBR's CA Pension Liability Index looking forward thirty years: 0/100. CA will substantially NOT meet its pension obligations looking forward thirty years. Either a reduction in benefits, or an increase in contributions to the defined benefits plans that depend on CALPERS is a given.
The bottom-line: California needs to convert its retirement systems from a defined benefits system [the current existing CALPERS] to a defined contribution plan [much like a 401K or 403b plan].
About Me
- Bapcha
- Silicon-Valley, California, United States
- Moody's, S&P and Fitch's have been abject failures at rating bonds. So, someone has to do a good job, and since nobody is doing it well, I will. The bottom-line is that Bapcha's Bond Ratings are real Bond ratings that not only reflect the ability of the institution to pay interest on the bond, but also takes pension liabilities into consideration.