Moody’s to Review Bond Issue : Finance: Service, acting on its own, cites investors’ concern in offering to evaluate an O.C. toll-road issue.

Citing concerns about any bond issues linked to bankrupt Orange County, Moody’s Investors Service said Wednesday that it will evaluate $1.1 billion of bonds being sold next week to build a toll road--even though it has not been asked to review them.

Moody’s, one of Wall Street’s major rating services, said the unprecedented move was prompted by inquiries from worried investors. Normally, rating agencies review an offering only at the seller’s request.

Market participants speculated that Moody’s moved to rate the deal so it could keep its hand in the large, high-profile issue and show the market it has become more vigilant since Orange County’s fiscal collapse.

The closely watched and long-awaited bond issue by the Foothill/Eastern Transportation Corridor Agency is the most ambitious offering planned by a local authority since the county filed bankruptcy in December.

Although the cities of Anaheim, Huntington Beach and Laguna Beach have successfully sold small bond issues since the filing, the toll road bond sale next Wednesday will be the first major test of investors’ appetite for Orange County bonds.

The bonds--the first $1-billion issue to be sold in the municipal market this year--were already rated “investment grade” by two bond rating houses when Moody’s announced it would jump in with a rating.

The offering’s large size and questions about the county’s credit quality have “generated a great deal of investor inquiry,” said Daniel Heimowitz, a director of Moody’s public finance department.

“This is unprecedented in the municipal market,” said Zane B. Mann, publisher of the California Municipal Bond Adviser, a publication in Palm Springs. “And I suppose maybe [Moody’s] feel they have a responsibility to bond investors.”

Moody’s had bestowed a desirable AA bond rating on Orange County before the fiscal collapse. The firm was later publicly criticized for having failed to discover the county’s fiscal problems and for giving investors a false sense of confidence.

“Moody’s is just trying to play catch up from the black eye they got from Orange County,” said one bond specialist who asked not to be named.