The County of Los Angeles once again received the highest short-term ratings from the nation’s top three rating agencies for the County’s annual cash flow financing, making it one of the few governmental agencies of its size to get outstanding ratings this year.
The ratings by Moody’s, Standard & Poor’s, and Fitch mean the County can expect to pay low interest rates to borrow money it needs to temporarily finance operations while awaiting tax receipts and other revenues.
Each year the Board of Supervisors authorizes the sale of Tax Revenue Anticipation Notes (TRANs) to assist with short term cash management. The County’s short term borrowing program is necessary since the County receives certain revenues, such as property taxes, on an uneven bases throughout the year. The strong confidence by the credit rating agencies reaffirms the County’s stable outlook, diverse and mature economy and good long term creditworthiness.
Fitch Ratings announced a “F1+” rating for Los Angeles County, representing the firms’ highest possible short term rating, assigned to those organizations with an “exceptionally strong capacity to meet its financial commitment” over the next 12 months. In its announcement, Fitch stated the ratings reflect the County’s “sound financial reserves and prudent management efforts to achieve fiscal balance amid ongoing and sizable financial pressures.”
Standard & Poor’s assigned the County an “SP-1+,” its highest rating for short term municipal notes, noting the County’s long term creditworthiness and conservative cash flow projections.
Moody’s has assigned a rating of “MIG 1,” which is defined as providing “superior credit quality,” whereby “excellent protection is afforded by established cash flows.” Moody’s cited that in 2012, the County reversed a four year trend of declines and recorded a cash increase, a notable achievement because it underscores the inherent conservative nature of its projections.
“We received these great ratings thanks to the leadership of our Board of Supervisors and the fiscal stewardship of countless County managers operating on the frontlines in a still improving economic environment,” said Chief Executive Officer William T Fujioka. “Most importantly, it was the work of all County staff allowing us to maintain our financial viability. With the leadership of our Board, we have lived within our means, which has reduced our borrowing costs and yielded tremendous savings to the benefit of all County residents.”