County officials expressed optimism Thursday that Wall Street rating agencies will soon upgrade the county's rock-bottom credit rating and that the move will give a boost to bankruptcy recovery efforts.
Bob Wilson, the county's assistant chief executive officer, said an upgrade of the county's rating to "investment grade" would reduce the interest and insurance costs associated with $702 million in bond issues planned for June.
Proceeds from the bond sales will be used, along with cash on hand, to redeem nearly $900 million in outstanding notes and bonds and to pay off more than $150 million in other county debts, allowing the county to emerge from bankruptcy.
Wilson said the rating agencies are now examining the recovery plan and county budget situation and might make a decision in the near future.
Because of the time difference between California and New York, representatives of the two major rating agencies--Moody's Investors Service Inc. and Standard & Poor's Corp.--could not be reached for comment.
Both agencies assigned some of their lowest credit ratings to the county's bonds last year, when the county was unable to redeem almost $1 billion in notes due in June and July of 1995.
After the county won legislative approval for its recovery plan last fall, Standard & Poor's said the county was making significant progress toward financial stability. But the rating agency expressed concern about the county's ability to sell more bonds and keep its general fund budget in balance.
The county's public finance commission will hold a meeting Friday to select a bank that will serve as the third-party trustee for the bond issue. The bank will be in charge of disbursing funds to the various creditors.
Wilson said the county now hopes to move forward with the bond issue a few weeks earlier than first expected, in order to create some breathing room in case any difficulties crop up. Officials say the county will emerge from bankruptcy by the end of June.