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Publication date: 25-Mar-2004 <br />Reprinted from RatingsDirect <br /> <br />Essex (County of) <br /> <br />Credit Analysts: Nikola Swarm, Toronto (1) 416-507-2582; Stephen Ogilvie, Toronto (1) 416-507-2524; Valede E Blair, Toronto (1) 416-507- <br />2536 <br /> <br />ISSUER CREDIT RATING <br />Essex (County of) <br />Issuer Cr~lil Rafln~g <br /> <br />Issuer credit rating history: <br />May 1. 2001 <br />A+ <br /> <br />Maier Raflnfl Factors <br /> <br />Ratlcrale <br /> <br />Outlook <br /> <br />Major Rating Factors <br /> <br />Strengths: <br /> <br /> · Very Iow current and expected debt burden <br /> · Good liquidity <br /> <br />Weaknesses: <br /> <br /> · Low economic diversification <br /> <br />Rationale <br />The ratings on the County of Essex, located in the Province of Ontario, reflect <br />the county's very Iow current and expected debt burden, good liquidity levels, <br />and good budgetary performance. The ratings are constrained by the Iow level <br />of economic diversification within the county and contingent liabilities retaled <br />to lawsuits outstanding. <br /> <br />Essex has a very Iow current debt burden. The ceunty's C$15.4 million of <br />direct debt outstanding in 2002 amounted to only 19% of operating revenue, <br />the vast majority seE-supported. Planned capital expenditure is not expected <br />to significantly increase the county's debt burden. <br /> <br />Essex also has good liquidity levels and has been, in fact, a net creditor for <br />many years. Although Essex is planning to reduce certain reserves and <br />related cash holdings in the coming years, the county is nevertheless <br />expected to maintain liquidity that is well above average. <br /> <br />Essex has a good record in terms of budgetary performance and the county's <br />2002 operating surplus continues this tradition. Solid operating surpluses <br />provide Essex with the means to fund its capital expenditure largely from <br />internal sources, reducing debt issuance needs. <br /> <br />The county's economy is very concentrated in the automotive sector, which <br />accounts for an estimated 65% of employment. Remaining employment is <br />primarily in the agricultural sector. This lack of diversification necessarily <br />entails a higher degree of economic risk than would otherwise be the case. <br />Despite this disadvantage, recent economic performance has generally kept <br />pace wilh Essex's peers. In fact, by some measures, such as population <br />growth, the county has done better than many of its peers. In addilion, Essex <br />is well located for future growth, given its position on the Canada-U.S. border, <br />and is directly in the line of one of the principal Canada-U.S. trade reutes. <br /> <br />Essex and MFP Financial Services Ltd. have mutual lawsuits outstanding <br />concaming the financing of the landfill site operated by the Essex-Windsor <br />Solid Waste Authority. Although Standard & Poor's Ratings Services expects <br /> <br /> <br />