Despite state turmoil, Ventura County sells debt at low rate

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In an encouraging sign for California local governments, Ventura County today was able to borrow $145 million via short-term notes at a relatively low interest rate.

The county will pay an annualized tax-free yield of 0.37% on its notes. ‘We were hoping to get below 0.5%,’ said Paul Derse, Ventura’s chief financial officer.

California counties routinely borrow money at this time of year via so-called tax and revenue anticipation notes, which provide a cash bridge to cover expenses ahead of future tax payments.

But the state’s budget debacle has raised concerns that investors might penalize the counties on fears that local government finances could be devastated by Sacramento’s drastic cost-cutting.

On Wednesday, Los Angeles County delayed a planned $1.1-billion note sale until next week, saying it wanted to give investors more information about the potential effects on county finances from state budget cuts.

Despite expectations of more state-generated financial pain, credit-rating firms this week gave their highest-quality grades to the Ventura and L.A. County notes. That apparently was enough for Ventura’s note buyers.

-- Tom Petruno