The County of Los Angeles has once again received the highest short-term ratings from the nation’s leading credit rating agencies. As an added benefit of these outstanding credit ratings, the County also secured record-low borrowing costs this week, ultimately resulting in more money being available for public services and community programs.
Since 1977, the Board of Supervisors has authorized the annual sale of Tax Revenue Anticipation Notes (TRANs) to assist with short-term cash management. This temporary borrowing program is necessary since the County receives certain revenues, such as property taxes, unevenly throughout the year.
In connection with the sale of the 2014-15 TRANs, the County recently received the highest short-term ratings from each of the three major credit rating agencies. Fitch Ratings, Moody’s Investors Service, and Standard and Poor’s assigned ratings of F1+, MIG 1, and SP-1+, respectively. Each of the credit rating agencies cited the County’s improving financial condition, fiscal discipline and conservative management practices as positive factors in making their ratings determinations.
As an added benefit of these highest-possible ratings, the County is able to secure lower interest rates when borrowing money needed to temporarily finance operations. The $900 million of TRANs notes sold by the County this week were secured at a record-low borrowing cost of 0.12-percent, which is more than five basis points lower than the County’s prior low record of 0.174-percent achieved last year.
“These exceptionally high ratings, and the record low interest rates, represent a vote of confidence in the County’s fiscal stewardship,” said Board of Supervisors Chairman Don Knabe. “Our Board’s policy of living within its means has reduced our borrowing costs and yielded tremendous savings to the benefit of all County taxpayers. While other jurisdictions continue to struggle, these low borrowing costs allow us to invest in the infrastructure projects and programs and services which matter most to our residents and their quality-of-life.”