Just as some companies seem to be recidivists as far as getting into financial trouble is concerned (Citi, First Boston before it was finally absorbed by Credit Suisse), so to are some investors.
Orange County’s latest escapade apparently isn’t as serious at the one visited upon them by former treasurer Robert Citron, namely, $1.6 billion in losses. In this case, the county has money funds of $3.5 billion, with $837 billion of SIV debt, all but $152 million of which is being reviewed for possible downgrade. That means roughly 20% of the fund is at risk.
But no one at Orange Country seems particularly worried. From Bloomberg:
Finance officials with the Orange County Treasurer’s office said the SIV debt it holds continues to meet its obligations and there is virtually no exposure to risky mortgages in them. All the debt still carries top ratings.
“We don’t have the same kind of debt that Florida has,” said Paul Cocking, the chief portfolio manager for the county. “They’re all highly rated assets.”
Haven’t we heard that one before?