Standard & Poor's Ratings Services lowered its long-term rating to BBB-plus from A-plus on Lindmore Irrigation District, Calif.'s revenue certificates of participation (COPs), series 2010A.
The outlook is negative.
"The lowered COP rating reflects our view of the district's limited financial flexibility; negative net coverage levels in fiscal years 2012, 2013, and projected 2014; and declining cash balance due to a use of cash to cover expenses in fiscal years 2012, 2013, and projected 2014," said Standard & Poor's credit analyst Mary Ellen Wriedt.
The negative outlook reflects the potential continued decline in district revenues due to the current severely dry weather conditions. The agency could lower the rating within the two-year outlook horizon if liquidity and DSC continue to decline, although it believes the exact rating impact of the drought is difficult to determine. It does not expect to raise the rating during the next two years due to volatility in the district's water supply and limited financial flexibility.
