Riverside County Plans Short-Term Note Sale

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LOS ANGELES — Riverside County, Calif. plans to sell $102 million in Teeter notes the week of Sept. 29.

The proceeds will refund a portion of the county's outstanding 2013 Teeter notes and fund an advance of delinquent property taxes to local taxing agencies.

The notes are secured by delinquent property taxes and proceeds from the sale of tax-defaulted properties, and have been legally validated as a binding obligation of the county.

Fitch Ratings assigned the notes its F1-plus short-term rating Sept. 19, based on Fitch's view of the county's general credit quality, as reflected in its AA-minus implied ULTGO rating.

The county of 2.3 million in Southern California's Inland Empire was severely affected by the housing-led recession, but has been in recovery for several years aided by a well-diversified economy, according to Fitch.

Fitch assigned a negative outlook to Riverside County's long-term obligations in May.

The county was able to achieve structural balance after multiple deficit years in 2013, but Fitch said it "believes the general fund's structural balance will be challenged going forward by a multi-year cumulative wage hike, pent-up demand to restore services cut during the recession, and operational pressures anticipated upon the fiscal 2017 opening of a new correctional facility."

Fitch report analysts cited concerns about fiscal challenges at the county's hospital, Regional Medical Center, for the negative outlook.

Analysts also cited an inability or unwillingness to maintain structurally balanced general fund operations, particularly while absorbing wage and correctional cost increases, over the intermediate term.

Moody's Investors Service rated the Teeter notes MIG 1 on Sept. 18.

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