One of the first questions about credit ratings often is: What does that mean?

Mendocino County has found the answer. When the County moved to refinance $22.4 million in bond debt, S&P gave the debt a BBB- credit rating, or just above non-investment grade. The County had hoped to spend money on bond insurance to make up for their abysmal credit rating, but it didn’t work out.

The refinance was part of an effort to save the County money in the long run, as they had to hoped to save $100,000 per year.

From the Ukiah Daily Journal:

Mendocino County officials have learned the county’s poor credit rating is keeping them from refinancing $22.4 million of bonds the county issued in 2000, a plan the county hoped would save $100,000 annually.

The refinancing plan “hit a major roadblock” when the New York bond insurance company, Assured Guaranty, refused to insure the transaction, according to Mendocino County CEO Carmel Angelo. The county had been relying on bond insurance for the refi, needing the insurance company’s good credit to bolster the county’s bad credit.

Angelo wrote in a Nov. 8 report to the Board of Supervisors that Assured Guaranty “opted not to extend a bond insurance bid” for the refinancing transaction.

Read the full article here.