Standard & Poor’s Ratings Services, in its most recent issuer credit rating (ICR) has raised the Contra Costa County Credit Rating to ‘AAA’ from ‘AA’, based on recently released local general obligation (GO) criteria. At the same time, Standard & Poor’s raised its long-term and underlying rating (SPUR) to ‘AA+’ from ‘AA-’ on the county’s existing lease revenue bonds and pension obligation bonds (POBs).
The outlook on all ratings is stable. The lease revenue bonds are secured by base rental payments paid to the Contra Costa County Public Financing Authority from the county for use of certain facilities under a master trust agreement.
Under a lease-lease back structure, the county leases the facilities to the authority, and the authority leases them back to the county. As part of the lease transaction, the county has covenanted to budget and appropriate lease payments, to maintain two years of rental interruption insurance to mitigate abatement risk, and to fund a debt service reserve.
The POBs are secured by any available source of county revenues. The county has no general obligation bonds outstanding. Currently only a handful of other California Counties have the AAA rating.
Contra Costa County Credit Rating Improves
The rating reflects S&P’s assessment of the following factors for the county:
- Very strong economy, which benefits from participation in the broad and diverse San Francisco Bay Area economy;
- Very strong management, with strong financial policies;
- Very strong budgetary flexibility, with 2012 audited reserves at 18% of general fund expenditures;
- Adequate budgetary performance;
- Very strong liquidity, providing very strong cash levels to cover both debt service and expenditures; and
- Adequate debt and contingent liabilities position, driven mostly by its high net direct debt.
Click here to read the full S&P report.