S&P Removes Negative Outlook From California Muni Rating (BFZ, MUC, EVM, IIC, IQC, NUC, NAC, NXC, PZC, PCK, PCQ)

Is California’s debt rating safe?  Or is in the same boat as Greece?  That depends upon whom you ask.  Meredith Whitney would probably say it is not safe.  Standard & Poor’s, however, is now saying something different.  After a new budget passage we have seen that S&P has removed its “negative” outlook on the State of California.

The negative outlook is now listed as “stable” and it has maintained a “A-” rating for the state after the $27 billion or so budget gap was mostly filled.  This is considered more of a stop-gap that balances the huge difference between expenses and revenues.

S&P even called the budget which Governor Jerry Brown signed as being mostly realistic.  It also went as far as to say that the state will now get to issue its revenue anticipation notes.  For investors seeking the high income of municipal bonds, this may matter.  It was not that long ago that California was believed to be very much at-risk of other downgrades.

There is still some caution at stake because S&P noted some missed opportunities and noted that it does not adequately address many of its accumulated obligations from over the last decade.

This is far from an upgrade.  Investors should also consider that this “A-” is still the lowest rating of all 50 states.  Some of the more liquid closed-end mutual funds that trade around the California municipal market are as follows:

BlackRock California Municipal Income Trust (NYSE: BFZ)
+0.9% at $13.50; 52-week trading range is $12.02 to $14.99

BlackRock MuniHoldings California Insured Fund, Inc. (NYSE: MUC)
+0.4% at $13.61; 52-week trading range is $12.-7 to $14.70

Eaton Vance Insured California Municipal Bond Fund (NYSE: EVM)
+1.1% at $11.87; 52-week trading range is $10.12 to $13.50

Invesco California Insured Municipal Income Trust (NYSE: IIC)
+0.1% at $13.32; 52-week trading range is $11.84 to $14.95

Invesco California Quality Municipal Securities (NYSE: IQC)
+0.8% at $12.23; 52-week trading range is $10.81 to $13.60

Nuveen California Quality Income Municipal Fund (NYSE: NUC)
-0.35% at $14.36; 52-week trading range is $12.18 to $16.08

Nuveen California Dividend Advantage Municipal Fund (NYSE: NAC)
+0.3% at $12.79; 52-week trading range is $11.50 to $14.50

Nuveen California Select Tax Free Portfolio (NYSE: NXC)
+0.5% at $13.20; 52-week trading range is $12.31 to $14.53

PIMCO California Municipal Income Fund III (NYSE: PZC)
+0.2% at $9.30; 52-week trading range is $8.33 to $10.56

PIMCO California Municipal Income Fund II (NYSE: PCK)
+0.2% at $9.30; 52-week trading range is $7.90 to $10.41

PIMCO California Municipal Income Fund (NYSE: PCQ)
-0.26% at $12.89; 52-week trading range is $11.42 to $14.30

JON C. OGG