County's Second $20-Million Note Paid by Edison


The second of Orange County's two $20-million Edison International investments was paid in full Wednesday, ending what county Treasurer John M.W. Moorlach called six months of "crisis management."

Moorlach, who was criticized by some earlier this year for investing $40 million in school money in the utility despite the state's worsening energy crisis, said that all principal and interest payments were made according to schedule.

"This is one of those things where we said throughout that we'd be paid, and today Edison has paid us our principal in full," he said. "We executed our strategy, and we succeeded."

Moorlach said the $20-million medium-term note, which was purchased last September, earned $951,000 in interest for the county and school districts.

The other $20-million investment in Edison International, which was purchased in December, matured Jan. 31 and earned $210,834 in interest.

As a result of the full payment of principal and interest on the two investments, Moorlach said, the credit rating of the Orange County Educational Pool has been returned to AAA/V1+, the highest rating possible.

The rating agency Fitch Inc. had downgraded the investment pool from AAA to AA because of the Edison investment; about the same time, Southern California Edison's credit rating fell to junk-bond status.

Southern California Edison is a subsidiary of Edison International.

Steve Lee, a Fitch analyst in New York, said payoff of the final $20-million note "is definitely good news for the pool participants and for the treasurer. From our standpoint credit-wise, the pool is right back where it was before the downgrade of Edison."

The county's $40-million investment in Edison International represented 3.3% of about $1.1 billion in the county's educational investment pool, which holds excess operating cash for every school district in the county. Interest earnings--about $80 million a year--fund a variety of school programs.

Moorlach's office invested the first $20 million last September, three weeks after the credit-rating firm issued a warning about growing risks in the California utility market.

However, when both investments were purchased, they were rated at the highest possible levels by the various rating agencies, said Brett Barbre, spokesman for the county treasurer's office.

The rating agency downgraded Southern California Edison notes on Dec. 11--four days after the county made the second $20-million investment in Edison International.

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