Montebello will move ahead on a note issue despite claims earlier this month that an ill-timed release of a report from the California controller’s office jeopardized its efforts to sell short-term notes.
The $2.5 million of tax and revenue anticipation notes the Los Angeles-area city plans to sell on Nov. 1 received a MIG 2 rating from Moody’s Investors Service.
Moody’s also affirmed a Baa2 issuer rating and a Ba1 rating on lease-supported certificates of participation, and removed a negative outlook on those ratings.
However, Montebello will offer a reduced amount of $2.5 million in Trans instead of the $3.9 million in notes previously announced, according to the Moody’s report.
Montebello officials lamented the timing of two audits released by the California controller’s office in late September just as they planned to sell $3.9 million of notes.
The report resulted in the issuance being pushed out a month, and city officials said they even contemplated not selling notes if they couldn’t get the right pricing.
The audits from the controller’s office called into question $31 million in spending, loan and fund transfers.
Moody’s attributed the short-term rating to the city’s favorable projected cash balance for 2011-12 and the availability of alternate liquidity.
The city’s generally weak financial position and narrow general fund cash margin contributed to the lower long-term ratings, the report stated.
Montebello, a town of about 65,000 in eastern Los Angeles County, has been mired in a financial crisis for months. The city is seeking an outside loan to avoid temporarily running out of cash later this year.