Market concerns stemming from Orange County's investment pool debacle could force Los Angeles to delay a plan to sell $74 million lease revenue bonds in late January.
"Some bankers are telling me there is general concern about California debt," Los Angeles finance specialist Gerry Miller said.
Proceeds from Los Angeles' next scheduled debt issuance are earmarked for recycling and automated collection equipment, and for landfill-related capital costs.
"The bond market is pretty volatile," Miller said. "There is a lot of uncertainty, particularly with California bonds at this point."
He said, "we may be in a position of needing to delay that financing somewhat if things have not calmed down by the end of January."
In a related development, the Los Angeles city council on Dec. 13 voted 11 to 0 to create a blue-ribbon panel to review the city's investment strategies.
"It's basically just an outside panel to take a look at what we do to ensure that a similar situation wouldn't occur here," Miller said.
The city, in conjunction with its financial adviser, Public Resources Advisory Group, released a statement saying Los Angeles' treasurer "does not engage in the type of investment practices" that prompted the Orange County crisis.
"Although the investment policies permit reverse repurchase agreements, the city treasurer has not utilized this investment option in the past several years, and is unaware of any use of this option" ever, the statement said.
The statement said that Los Angeles does not invest in leveraged products or structured notes, and investor in Los Angeles long-term obligation "should be assured that they have a secure investment."
"We don't do what they do in Orange County," Miller said, adding that Los Angeles has no funds in the Orange County investment pool.
