Water District Ready for BABs

The Rancho California Water District will issue $101 million in Build America Bonds next week to fund capital improvements.

The district in Riverside County may also issue an unlisted amount of tax-exempt paper, according to its preliminary official statement. The maturity dates for the fixed-rate revenue-backed BAB issue range from 2032 to 2040.

Bank of America Merrill Lynch is the lead underwriter on the deal. Bond counsel is Stradling Yocca Carlson & Rauth and the financial adviser is Fieldman, Rolapp & Associates.

The bonds area rated Aa2 by Moody's Investors Service and AA-plus by Fitch Ratings and Standard & Poor's.

"Despite the pressures on the local economic base, water sales revenue has remained stable. The district has produced less water in each of the last three years but consistent rate increases have offset the decline in production," Moody's said in a recent report.

Moody's said the district's credit profile has been strengthened by its high level of reserves.

But the rating agency noted the district, like many California water agencies, will have to carefully manage both its supply and sales volume as it attempts to balance conservation against meeting budgeted water sales.

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California
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