Moody’s Investors Service said in a report Monday it will maintain its Aa2 rating on Los Angeles’ water system revenue bonds.
The Los Angeles Department of Water and Power is scheduled to sell two series of $325 million of bonds this month, according to Moody’s.
“The rating assignment reflects the system’s adequate current and projected coverage levels despite some weakening in fiscal 2011 and adequate cash position,” Moody’s said in the report.
Moody’s said the rating also factors in the city’s slow economic recovery, the exceptionally large customer base, improved supply and “reasonable likelihood that the system will manage rates to continue to grow revenues.”
The bonds are secured by a pledge of gross revenues from the water system.
The rating agency noted that the large amount of debt will likely require that revenues increase, and the department’s capital improvement plan will keep its debt ratios high.
“Our outlook on the department’s water revenue bond rating is stable, reflecting the likelihood that the water enterprise will achieve financial results largely consistent with its current position,” Moody’s said.