Standard & Poor's Ratings Services said it raised its long-term rating to AAA from AA on California Department of Water Resources' (DWR) Central Valley Project revenue bonds (Devil Canyon and Castaic facilities).

The outlook is stable.

"The raised rating is based on our view of the overall resilience and high credit quality of the participating contractors, further strengthened by the combination of a cash-funded debt service reserve and a 10% step-up provision for reserve replenishment," said Standard & Poor's credit analyst Tim Tung.

The rating reflects a several pledge of six water contractors to make payments pursuant to the 1972 Devil Canyon-Castaic Contract with DWR. The contract securing the bonds was entered into by the contractors and DWR to finance the construction of the dams and related power-generating equipment for the Devil Canyon and Castaic facilities — a key part of DWR's water system.

The six contractors that entered into the contract to pay bond debt service are: Metropolitan Water District of Southern California (AAA/stable water revenue bond rating, AAA/stable general obligation rating, population nearly 19 million), 88.1%; San Bernardino Valley Municipal Water District (AAA/stable water revenue bond rating — assigned in June 2011, population 660,000), 6.8%; San Gabriel Valley Municipal Water District (population 210,000), 1.8%; Castaic Lake Water Agency (AA/stable water revenue bond rating, population 287,000), 1.5%; San Gorgonio Pass Water Agency (a water wholesaler in a 225-square-mile service area, population 87,000), 1.1%; and Ventura County Flood Control District, now known as the Ventura County Watershed Protection District (population 460,000), 0.7%.

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