CHICAGO -- Moody's Investors Service confirmed the MIG-1 rating late Friday on $246 million of notes issued by Cuyahoga County, Ohio, citing "sufficient comfort" with an escrow fund created by the county to ensure the notes' repayment on Dec. 30.
But the rating agency said it still has the county's Aa long-term general obligation rating under review.
Jeanne Wilson, a senior analyst at Moody's, said the agency will make a determination on that rating after the county completes an assessment of its financial position following the shutdown last month of its local government investment pool.
"We want to see the impact of the unwinding [of the investment pool] and how it will affect the county's financial position and how [the county] will deal with that in 1994 and 1995," Wilson said.
The unwinding or sale of a large portion of Cuyahoga County's Secured Assets Fund Earnings program has resulted in losses of $114 million so far.
The county sold $265 million of the program's short-term securities at a loss of $14.5 million to help come up with the $246 million needed for the principal repayment on the taxable notes. Money for the repayment was placed in an escrow account with National City Bank, prompting Standard & Poor's Corp. earlier this month to affirm a SP1-plus rating for the notes.
Last week, the county completed the sale of about $544 million of securities in the program's leveraged portfolio, realizing a loss of $99.5 million, according to Dennis Roche, a county spokesman.
Now the county is contemplating a $138 million special obligation bond issue to restructure the remainder of the program's portfolio. Proceeds from the issue would be used to defense outstanding loans that resulted from reverse repurchase agreements entered into by the program.
However, Roche has said the county will not proceed with the bond issue unless it can be sold on a tax-exempt basis, and the county's financial position can sustain the bond sale.