Wall Street Upgrades County’s Short-Term Bond Ratings

Two Wall Street credit rating firms officially upgraded Los Angeles County’s short-term bond ratings Wednesday, which could allow the county to borrow $1.3 billion to cover operating costs at lower interest rates.

Although one of those credit rating companies, Fitch Investors Service, said the county’s credit outlook remains negative, it also said the nation’s largest county’s “economic and fiscal condition are beginning to stabilize.”

Such fiscal prudence by county officials makes Wall Street analysts feel more confident that the county can meet its financial obligations, and thus is deserving of a better credit rating, according to the analysts.

The upgrading of the county’s short-term credit rating comes about two years after its short- and long-term credit ratings were downgraded as a result of the county’s fiscal crisis, particularly its projected $1-billion-plus deficit in the summer of 1995. The move marks the first improvement in the county’s credit rating since 1995, although its long-term credit rating remains downgraded. That long-term rating causes the county additional borrowing costs on capital projects and other long-term loans.

Fitch’s short-term upgrading, which was echoed Wednesday by Moody’s Investor Service, could save the county about $2 million in borrowing costs this year.