Bangkok--14 Jul--Standard & Poor's
Standard & Poor's Ratings Services raised its underlying rating (SPUR) on Semitropic Water Storage District, Calif.'s outstanding debt to 'AA' from 'A'. At the same time, Standard & Poor's assigned its 'AA' long-term rating, with a stable outlook, to the district's series 2009A water banking revenue bonds.
"The upgrade reflects provisions of the trust indenture that establish a supplemental cash reserve fund that could cover for potential deficiencies from the water banking participants," said Standard & Poor's credit analyst Ian Carroll. "The stable outlook reflects that each agency will continue to make payments according to the terms of the agreements."
Rating factors include our opinion of: water banking agreements that require four water agencies to make annual, inflation-indexed maintenance payments that should provide adequate debt service coverage; a supplemental reserve expected to be funded at the largest participating water banking partner's share of maximum annual debt service; the considerable investments in banked water, already made by the four participating agencies, that would be forfeited if maintenance payments are not made; the creditworthiness of the rated water agencies participating in the water banking program; and the water storage district's good market position for providing water storage capacity.
The above credit strengths mitigate our concerns that, in order to meet debt obligations, each water agency must continue to make operating and maintenance payments.
RELATED RESEARCH
USPF Criteria: "Standard & Poor's Revises Criteria For Rating Water, Sewer, And Drainage Utility Revenue Bonds," Sept. 15, 2008
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Media Contact:
Ana Sandoval, New York (1) 212-438-5095, [email protected]
Analyst Contacts:
Misty Newland, San Francisco (1) 415-371-5073
Ian Carroll, San Francisco (1) 415-371-5060