Rating Agencies Split Over O.C. Bonds’ Safety : New Bond Ratings
How bond rating services rank the county’s upcoming $1-billion bond issues:
Moody’s: Baa (medium investment grade)
Reason: Improved financial position and extensive efforts to repay all short-term debt holders in full.
Standard & Poor’s: B (low-grade or junk bond)
Reason: High debt service level and limited capacity to raise revenue. Concern that a state intercept fund would not survive another bankruptcy filing.
Revised Ratings
On Thursday, Moody’s also revised its ratings on some of the county’s existing bond deals:
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Bond From To 1994A pension obligation bonds Caa Ba General obligation debt rating Caa Ba1 Certificates of participation, 7-1-86 and 1-1-91 Caa Ba Certificates of participation, 12-1-88 Caa Baa
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WHAT THE RATINGS MEAN
Bond ratings reflect credit-worthiness and investment quality. The ratings, issued by Standard & Poor’s Corp. and Moody’s Investors Service Inc., are assigned to local governments and to individual bond issues. A guide to the ratings:
Moody’s: AAA
Standard & Poor’s: AAA
What it means: Best quality with least degree of investment risk. Interest payments protected by exceptional and stable resources; principal is secure. Rarely assigned.
****
Moody’s: Aa
Standard & Poor’s: AA
What it means: High grade with slightly lower resources or greater long-term risks than those with AAA rating.
****
Moody’s: A
Standard & Poor’s: A
What it means: Upper-medium grade with adequate security of principal and interest.
****
Moody’s: Baa
Standard & Poor’s: BBB
What it means: Medium grade; lacking in outstanding investment characteristics with some speculative elements.
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Moody’s: Ba
Standard & Poor’s: BB
What it means: Predominantly speculative with only moderate protection of interest and principal payments; long-term position uncertain. Moody’s Ba1 rating indicates slightly stronger investment attributes than Ba.
****
Moody’s: B
Standard & Poor’s: B
What it means: Low grade, speculative; lacking characteristics of a desirable investment.
****
Moody’s: Caa
Standard & Poor’s: CCC
What it means: Poor quality; may be in default or include other elements of danger regarding principal or interest.
****
Moody’s: Ca
Standard & Poor’s: CC
What it means: Highly speculative; often in default.
****
Moody’s: C
Standard & Poor’s: C
What it means: Lowest quality; poor prospects of attaining real investment standing.
****
Moody’s: none
Standard & Poor’s: D
What it means: In default
Source: Moody’s Investors Service, Standard & Poor’s
Researched by JANICE L. JONES / Los Angeles Times
