Fitch Lowers Orange Cty Educational Pool Due To SoCalEd Exposure.Business Editors NEW YORK--(BUSINESS WIRE)--Jan. 17, 2001 Fitch fitch: see polecat. has lowered the 'AAA/V1+' local government investment pool (LGIP LGIP Local Government Investment Pool ) ratings of the Orange County Treasurer's Money Market Educational Pool (The Pool) to 'AA/V1+' and places the new 'AA/V1+' rating on Rating Watch Evolving. These rating actions reflect The Pool's exposure to commercial paper (CP) issued by Southern California Edison Southern California Edison (or SCE Corp), the largest subsidiary of Edison International (NYSE: EIX), is the primary electricity supply company for much of Southern California. It provides 11 million people with electricity. (SoCalEd) in two $20 million positions maturing on Jan. 31 and July 18, which in aggregate represent 3.3% of the portfolio. Fitch lowered its rating on SoCalEd's CP from 'F2' to 'C' on Jan. 4 and subsequently from 'C' to 'D' on Jan. 16. The 'AA' rating reflects the diminished di·min·ish v. di·min·ished, di·min·ish·ing, di·min·ish·es v.tr. 1. a. To make smaller or less or to cause to appear so. b. credit quality of The Pool's portfolio with the inclusion of the 'D' rated CP and the fact that the balance of The Pool continues to be invested in 'AAA' quality assets. In addition, the 'AA/V1+' rating indicates that pool participants are not expected to experience loss of principal value. All of the participants in the Orange County Treasurer's Money Market Educational Pool are required to place excess operating funds with The Pool and may withdraw funds only to meet current operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. . This mandatory participant base provides ongoing stability to The Pool. The Orange County Treasurer's Office has mapped out a plan of action in the scenario of a SoCalEd default. In such an event, The Pool will, on an amortized and equitable equitable adj. 1) just, based on fairness and not legal technicalities. 2) refers to positive remedies (orders to do something, not money damages) employed by the courts to solve disputes or give relief. (See: equity) EQUITABLE. basis, reduce earnings paid to participants and retain these earnings to rebuild the capital base of The Pool. The Pool has sufficient liquidity to meet all valid participant redemptions at par during this period. Fitch will continue to monitor the developments of SoCalEd and evaluate the impact on The Pool, as well as actively review all of its rated money market funds and LGIPs that may have exposure to the California utilities market. |
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