FOR IMMEDIATE RELEASE
December 17, 1997
Contact: Diane Thomas
County of Orange
Returns To Investment Grade Rating
(SANTA ANA) – Moody’s
Investor Service, a leading New York bond rating agency,
announced this morning that it has returned the County
of Orange to an investment grade rating. The County lost
its investment grade rating with the 1994 bankruptcy and
has been working toward this milestone since last year’s
emergence from bankruptcy.
"What great news to have as I end my term as chairman
of the Board," said William G. Steiner, Fourth District
Supervisor. "This rating shows restored trust from the
financial community. It also is evidence of the success
of our restructuring and long-range planning. This is
a terrific way to start the holiday season."
Chief Executive Officer Jan Mittermeier said that rating
agencies study many aspects of an organization in determining
bond ratings. "From bankruptcy to an investment grade
rating is a long road," said Mittermeier. "The Board of
Supervisors has called for many changes to be implemented
so that we could make this progress."
After exiting bankruptcy in only 18 months, the Board
established policies to guide the County Treasurer’s investment
pool. Oversight committees were established, and an internal
auditor was appointed who would report directly to the
Supervisors. The County restructured to become more efficient
and eliminate duplication. For the first time, Supervisors
and County staff worked together in long-range strategic
and financial planning, and the Board identified priorities
to guide budget building.
"When you look at the $50 million the Board has set aside
for early pay-off of bankruptcy debt and you see that
we’ve built up our reserves again, you can see just how
far we’ve come," said Steiner. "Moody’s upgrading is a
recognition of all this."
"We want to thank Moody’s for taking the time to look
thoroughly at all we’ve been doing," said Mittermeier.
"This makes all the hard work worthwhile."
Gary Burton, the County’s Chief Financial Officer, explained
that Moody’s issued ratings today in three separate areas.
The certificates of participation issued to finance bankruptcy
debt received a rating of Baa2. The County’s pension obligation
bonds and most other debt received a Baa3. A small tax
exempt equipment lease, which will be paid off in three
years, received a Ba1. Burton explained that Baa3 begins
the investment grade level which leads to the highest
rating of Aaa.
"The ratings given a company by these investment firms
is a lot like your personal credit rating," said Burton.
"When your credit is good, banks are more likely to lend
you money, and your interest rate might even be lower.
Not only does Moody’s announcement indicate the financial
community’s restored faith in us, but it also will enable
us to borrow when necessary on the open market at a reasonable
rate. An investment grade rating is a rating agency’s
way of affirming a company’s capacity to pay interest
and repay principal on its debt"With non-investment grade,
or speculative, ratings as the County has carried since
bankruptcy, companies generally incur an extra expense
for insurance on their bond offerings to reassure potential
lenders. Interest rates are lower for companies with higher
ratings. Mittermeier said that the County does not anticipate
incurring any new debt in the near future. -30- (Separate
release arriving from Moody’s.)