Moody's Investors Service downgraded to A2 from A1 the rating on the Three Valleys Municipal Water District's 2003 refunding revenue certificates of participation. The downgrade affects $11.38 billion of debt.

Moody's analysts said the downgrade stems from the district's declining debt-service coverage and increasingly narrow operating margin, as the district has not enacted rate increases sufficient to pass on Metropolitan Water District of Southern California rate hikes to retail members.

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