CONCEPT WORTH ITS PAPER; COUNTY NOTES TO AID HOSPITALS.Byline: Deborah Adamson Daily News Staff Writer Hoping to raise enough capital to refurbish re·fur·bish tr.v. re·fur·bished, re·fur·bish·ing, re·fur·bish·es To make clean, bright, or fresh again; renovate. re·fur six hospitals, Los Angeles Los Angeles (lôs ăn`jələs, lŏs, ăn`jəlēz'), city (1990 pop. 3,485,398), seat of Los Angeles co., S Calif.; inc. 1850. County borrowed an idea from the business world: It issued a revolving line of commercial paper backed by leases. And thanks to its deft financing, the county will save about $10 million a year on interest payments, officials said Wednesday. Commercial paper, a short-term promissory note promissory note, unconditional written promise to pay a certain sum of money at a definite time to bearer or to a specified person on his order. Promissory notes are generally used as evidence of debt. or loan coming due in 180 days or less, is usually issued by a corporation, not a municipality. But the county found a way to use it, thanks to Maureen Sicotte, director of public finance at the county Office of the Treasurer and Tax Collector. ``We didn't have the cash'' to refurbish six county hospitals, including the Los Angeles County/USC Medical Center, she said. The county issued commercial paper through a nonprofit company it formed called the Los Angeles County Capital Asset Leasing Corp. The firm owns 21 county buildings that are leased back to the county. The nonprofit company's revenue secures the commercial paper. In addition, a bank issued a letter of credit on the commercial paper, in effect promising to pay for the loan if the county defaults, said Ken Kurtz, a Moody's Investors Service Moody's Investors Service A leading global credit rating, research and risk analysis firm. Moody's Investors Service A leading firm engaged in credit rating, risk analysis, and research of fixed-income securities and their issuers. bond analyst who follows Los Angeles County. Moody's gave the note its highest rating of P-1. In July, Los Angeles County raised $200 million on tax-exempt commercial paper Tax-Exempt Commercial Paper An unsecured short-term loan, usually issued to finance short-term liabilities, that provides the debtholders (bondholders) some level of tax preference on the earnings from their debt investment at a local, state or federal level, or a combination with the flexibility to get another $100 million. Half of the money will go to Los Angeles County/USC Medical Center, and the rest to five other hospitals. By moving from municipal bonds to commercial notes, the county saved about $10 million a year because the latter pays a lower interest rate. ``It's unusual for a city or county to do it, but it's becoming increasingly common among states,'' Kurtz said. ``It's a very flexible tool that really brings down the borrowing costs.'' Under the old financing program, the county's bonds paid about 8.5 percent to investors. The commercial notes pays about half the rate, on average. The county expects to finish paying off the commercial paper within eight to 10 years with the flexibility to extend payments up to 20 years, Sicotte said. Investors in the issue are big mutual funds, typically money market funds. The underwriters were Morgan Stanley  To comply with Wikipedia's , the introduction of this article needs a complete rewrite. Dean Witter Dean Witter may refer to:
The estimated $10 million the county will save won't go back to taxpayers - it's already been earmarked to pay for county services, the government said. |
|
||||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion