Rating Agencies Split Over O.C. Bonds’ Safety : New Bond Ratings

SANTA ANA â€”  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.

****

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