Wednesday, December 05, 2007

More Marks for Big Shitpile

Orange County goes another round.

Dec. 5 (Bloomberg) -- Orange County, California, bankrupted in 1994 by bad bets on interest rates, bought structured investment vehicles similar to those that caused a run on funds invested by local governments in Florida.

Twenty percent, or $460 million, of the county's $2.3 billion Extended Fund is invested in so-called SIVs that may face credit-rating cuts, said Treasurer Chriss Street. In all of its funds, the county holds a total of $837 million of SIV debt, including $152 million in its $3.5 billion of money-market funds that isn't under ratings review, said his spokesman, Keith Rodenhuis.


...The Orange County Glibertarian Register takes the sunny view:

The credit crunch has taken a tiny bite from Orange County's investment pool.

Treasurer-Tax Collector Chriss Street said Tuesday he discounted 17 county-owned securities by nearly $14 million after a ratings agency warned it might downgrade the securities.

The discount amounts to less than half of 1 percent of the $6 billion pool. So far the discount exists only on the county's books. If Street can avoid selling the securities he should eventually get full value for them.

Street said he doesn't plan to sell the securities because "there's no need. … These investments are still rated triple-A," the highest possible rating.

Triple-A, baby!

...and this tidbit:

"We didn't think they paid enough for the risk," said Josh Anderson, a Pimco expert on the securities.

Pimco has bid on assets held by some troubled structured investment vehicles, Anderson said, and "they aren't pretty."

Pimco's willing to put a price on and scoop up some of big shitpile. Who will take the offer?