TEXT - Fitch rates Los Angeles, Calif. wastewater system commercial paper rev notes
Dec 13 - Fitch Ratings assigns an 'AA' rating to the bank notes corresponding to the following city of Los Angeles, California (the city) commercial paper notes: --$200 million wastewater system commercial paper revenue notes, series A-1, A-2, B-1 and B-2. The Rating Outlook is Stable. SECURITY The bank notes are subordinate obligations, secured by and payable from net revenues of the city's wastewater system (the system) after payment of operating and maintenance expenses and all senior lien obligations. CREDIT PROFILE Fitch has reviewed the interest rates, cure periods and amortization schedules specified in the documents governing the bank notes. Under the terms of the reimbursement agreements with the letter of credit banks, the city is required to amortize bank note amounts in approximately equal semi-annual installments over a three-year period beginning approximately six months after a liquidity draw. At present, there are no bank notes outstanding. While the terms of potential bank notes could pressure the system's financial performance if the entire commercial paper authorization were to become bank notes for a sustained time period, Fitch believes that the system's existing financial profile as well as the system's implied market access to take out such notes with long-term debt mitigate any significant concern. Furthermore, Fitch believes the risks associated with the notes are adequately reflected at the current rating level. For more information on the system, see Fitch press release 'Fitch Rates Los Angeles, California Wastewater Sr Revs 'AA+' & Sub Revs 'AA', Outlook Stable' dated April 12, 2012.