Standard & Poor's Ratings Services raised its long-term rating and underlying rating (SPUR) to 'AA+' from 'AA' on the Los Angeles Department of Water and Power's (LADWP) water system revenue bonds outstanding. In addition, we raised the long-term component of our dual rating (AA+/A-1+) to 'AA+' from 'AA' on LADWP's series 2001B-4 variable-rate bonds outstanding. Finally, we assigned our 'AA+' long-term rating to LADWP's $550 million series 2016A and $325 million series 2016B water system revenue bonds. The outlook is stable.
The rating action reflects the application of our revised criteria, "Rating Methodology And Assumptions For U.S. Municipal Waterworks And Sanitary Sewer Utility Revenue Bonds," published Jan. 19, 2016 on RatingsDirect.
"The rating reflects our view of such factors as the department's very strong service territory, extremely strong historical all-in coverage metrics , and extremely strong liquidity position," said Standard & Poor's credit analyst.
The series 2016A bond proceeds will be used to fund $200 million in capital improvement projects, refund about $197 million in series 2006A bonds outstanding, and repay $250 million borrowed from its water system revolving loan. The series 2016B bonds are being issued to fund $148 million in capital improvement projects and refund about $185 million in series 2006A bonds outstanding.
The stable outlook reflects our view that, over the next two years, the department will continue to reap the benefits of a deep and diverse economic base and that its revised rate structure will result in continued stable and strong financial metrics.
