O.C. Investment Pools Draw Top Rating

SANTA ANA —  Plunged into bankruptcy by its ill-fated investments more than two years ago, Orange County announced Thursday that its portfolios have regained their ranking as among the best anywhere.

Fitch Investors Service on Thursday gave its highest rating--AAA--to the county’s $2.25-billion money market investment pools, along with a designation marking them as among the least risky portfolios.

“We got a much higher rating than I would have anticipated,” said John M.W. Moorlach, the county’s treasurer. But he noted, “We have worked long and hard for this.”

It was the crash of the county’s two investment pools in late 1994 that led to the largest municipal bankruptcy ever. Much of the highly leveraged pools, in which numerous cities and other public entities participated, consisted of volatile securities that dropped in value as interest rates climbed. The pools lost $1.64 billion.

Moorlach took over as county treasurer and, with Salomon Bros. Asset Management, led a restructuring that put county and school funds into money market investments--short-term securities that include high-rated commercial paper, certificates of deposit and bank obligations.

The county’s 36 school districts, required by law to invest much of their money through the county, were put in one pool, and the county and its agencies formed another. Salomon Bros. has since been phased out, leaving the job of managing the portfolios to Moorlach’s office.

No cities or other governmental bodies have joined the pools. Moorlach said he has received some interest from other governments, but he’s leaving the decision up to county supervisors, who so far aren’t opening the pools to any other participants.

The county, which paid for its rating like all investors, doesn’t expect to seek reviews by the larger Standard & Poor’s or Moody’s rating agencies. The county is suing S&P; over the 1994 debacle and has Moody’s on a list of possible defendants.