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ORANGE COUNTY <br />BOARD OF COMMISSIONERS <br />ACTION AGENDA ITEM ABSTRACT <br />Meeting Date: August 23, 2011 <br />Action Agenda <br />Item No. q - b <br />SUBJECT: Standard and Poor's (S&P) Downgrade of the United States Credit Rating and <br />its Potential Effects on Orange County's Bond Rating <br />DEPARTMENT: Financial Services <br />PUBLIC HEARING: (Y/N) No <br />ATTACHMENT(S): <br />S&P Report on State and Local <br />Government Ratings <br />INFORMATION CONTACT: <br />Frank Clifton, 245-2300 <br />Clarence Grier, 245-2453 <br />PURPOSE: To receive an update on the potential effects of the S&P downgrade of the United <br />States credit rating on the bond rating of Orange County. <br />BACKGROUND: On Friday, August 5, 2011, S&P downgraded the United States (U.S.) credit <br />rating from AAA (highest credit rating) to AA+ (one level below the highest). This caused <br />repercussions and uncertainty throughout global financial markets regarding the meaning of the <br />downgrade and its potential effects on municipal bond ratings of state and local governments. <br />Local governments in North Carolina that have been, or potentially will be, effected are as <br />follows: <br />City of Greensboro <br />City of Charlotte <br />City of Winston-Salem <br />City of Durham <br />City of Raleigh <br />City of Fayetteville <br />Guilford County <br />Mecklenburg County <br />New Hanover County <br />Wake County <br />Orange County, in November 2010, received an upgrade of its bond rating from AA1 to AA+ <br />from S&P. Based on staff's discussions with bond financial advisors, and the rating agencies, <br />staff does not anticipate a review or a downgrade of the County's bond ratings as a result of the <br />U.S. downgrade. <br />