Standard & Poor’s this week slashed its rating on the Palmdale Water District’s revenue certificates of participation to BBB from A on a sharp decline in revenues and a legal challenge to recent rate increases.

The downgrade affects about $36.7 million of COPs sold in 2004 with credit enhancement from Financial Guaranty Insurance Co. to finance construction of a water treatment facility. Standard & Poor’s also placed the debt on negative CreditWatch.

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