Jefferson County has suffered due to the most recent downgrade of XL Capital Assurance Inc., according to a material event notice filed Monday through Digital Assurance Certification LLC.
According to the notice concerning the county’s troubled $3.2 billion of sewer warrants — most of which is in variable- and auction-rate modes — XL Capital’s recent downgrades have disqualified the use of a nearly $165 million surety bond supporting a portion of the outstanding warrants.
The notice said Standard & Poor’s on June 6 lowered the long-term insured ratings on the sewer warrants insured by XL Capital to BBB-minus from A-minus . Additionally, XL Capital’s A3 rating from Moody’s Investors Service is on review for possible downgrade and its BB rating from Fitch Ratings is on negative watch, the notice said.
“The county has not yet determined its response to the most recent downgrade of XL Capital and the resulting disqualification of the XL Capital surety bond in the amount of $164,863,746,” the notice concludes.
The county filed four material event notices through DAC on Monday regarding various insurer downgrades, none appearing to affect the county’s debt except for the sewer warrants.
In a joint statement June 5, Jefferson County commissioners said they are continuing good faith negotiations with creditors.
“This has been a difficult situation for the county and its creditors alike,” the statement said. “At this time, our energies and resources are committed to a settlement that will protect the county’s future rather than pointing fingers or assigning blame.
The county on June 1 signed an agreement with Merrill Lynch & Co. to serve as t “financing adviser and structuring consultant” for the restructuring of the county’s outstanding sewer debt.