LOS ANGELES — Moody's Investors Service San Diego County's raised issuer rating to Aaa from Aa1 Aug. 14, while also upgrading the county's lease and pension obligation bond ratings to Aa2 from Aa3.
The upgrades come as the county plans to refund $93 million certificates of participation from its Edgemoor and RCS Refunding Series 2014A on Aug. 27. The COPs were used pay for lease rental abatement. It also plans to refund $2 million in 2014B taxable COPs on the same day. The new refunding COP deal received the Aa2 rating. The outlook is stable.
"The upgrade primarily reflects the county's consistent maintenance of a very strong fiscal position, inclusive of healthy cash and reserve levels that we expect will remain well above average, given an above average performing economy and the county's history of sound fiscal management," Moody's analysts said in the report.
Moody's also cited the county's overall credit quality and stable and prudent management, which maintained the county's resilient credit strength even during the recession.
San Diego County's above-average socioeconomic indicators and its exceptionally large and diverse assessed valuation were also noted.
"The county's debt burden is low and entirely fixed-rate, resulting in minimal probability of any credit strains resulting from its debt service obligations," raters said.
Like all California counties, San Diego is reliant upon the state for a significant portion of its revenues. As such, its credit profile is strengthened by the improved credit quality of the state as reflected in Moody's recent upgrade of California's GO rating to Aa3. Despite the link to the state, the county soundly managed its state mandates through the downturn, according to the report.
The issuer rating is equivalent to what the county's general obligation bond rating would be if it had any such debt. The two-notch distinction on the lease rating is based on the relative weakness of the pledge on the leases compared to the county's theoretical general obligation promise, analysts said.
Challenges Moody's cited were growing pension costs, exposure to the volatile state budget and a vulnerability to federal spending reductions as a result of the region's unusually high military presence.
The stable outlook incorporates Moody's expectation that the county's economy, financial profile and debt will be either improve or remain comparable to current levels.
