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.
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.
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.