UBS On-Air: Market Moves Top of the Morning: Munis - California compendium
Mar 5, 2026
Jeannine Lennon, senior municipal strategist covering California issuers and policy risks, and Ted Galgano, senior municipal strategist focused on California fiscal and credit analysis. They walk through a compendium of 15 major California issuers and $200+ billion of debt. Topics include issuer risk splits, California’s revenue cyclicality and billionaire tax debate, and wildfire litigation and financial pressures tied to LADWP.
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California's Largest Issuers Are Mostly Low Risk
- California's 15 largest issuers carry over $200 billion in combined debt with most rated low risk by CIO.
- Twelve issuers are in CIO risk categories 1–2 and three are category 3, including LA Unified and LADWP electric and water bonds.
Revenue Surges Mask Lingering Structural Deficits
- California faces structural operating deficits despite revenue surprises driven by markets and a $42 billion upside this year.
- The state still projects a $2.9 billion 2027 shortfall and $22 billion in 2028 but expects to keep about $23 billion in reserves.
Top 1% Drive A Large Share Of State Revenue
- California's revenue is highly concentrated with personal income tax at ~62% of operating revenue and ~40% of that coming from the top 1% of filers.
- That means roughly 176,000 taxpayers disproportionately drive state receipts, exposing revenues to market and migration shocks.