ORANGE COUNTY IN BANKRUPTCY : Losers--and Winners?

Crisis breeds opportunity--both to make good investments and to tumble into bad ones. Orange County’s shocking decision to seek Bankruptcy Court protection could rock firms like Granite Construction Inc. that counted on the county’s business--in its case, a contract to build the San Joaquin Hills toll road. Some analysts say that it could boost the shares of companies whose businesses could expand--such as Ambac, a New York firm that insures bond issues. Shares in Merrill Lynch, one of the country’s key financiers, continued to slide as a result of the debacle.

BONDS TO BET ON?

Some municipal bonds with “Orange County” in their name may not be poison. Bond traders say bonds issued by agencies that did not invest in the county’s loss-wracked investment pool and that are paid from an independent revenue stream--such as municipal utility issues--could be a good bet. Indeed, they might rebound as their distance from the county’s problems become more evident. But be careful, traders say; some may have indirect ties to the pool.

BOND FUND VALUES DECLINE

Share prices of California muni bond mutual funds were mostly lower again on Thursday, but the losses were minor after Wednesday’s sharp declines. A sampling of funds:

Thurs. Share price change: Fund close Wed. Thurs. Alliance Muni Cal. A $9.13 $-0.23 $+0.04 Dean Witter Cal. T-F 11.74 -0.14 -0.04 Dreyfus Cal. Tax-Ex. 13.50 -0.18 -0.04 Fidelity Cal. T-F Ins. 9.12 -0.18 -0.01 Franklin Cal. Tax-Free 6.74 -0.09 -0.01 Kemper Tax-Free Cal. 6.78 -0.10 -0.03 Putnam Cal. T-E Inc. A 7.71 -0.13 -0.01 Sierra Cal. Muni 9.77 -0.17 -- Vanguard Cal. T-F Ins. 9.93 -0.19 -0.06

Prices used are net asset value per share.

CAUGHT IN THE FALLOUT

Daily closes since Nov. 28:

Merrill Lynch

Thursday: $33.50, down $1.50

Ambac Inc.

Thursday: $31.00, down $1.25

Granite Construction

Thursday: $18.00, down $2.63

Sources: Dow Jones; Reuters