January 23, 2009
REVISED WITH CORRECTION
LADWP WATER REVENUE BONDS EARN
STRONG RATINGS FROM WALL STREET
LOS ANGELES — Wall Street’s three leading global ratings agencies–Fitch Ratings, Standard & Poors and Moody’s Investors Service–have assigned ‘AA,’ ‘AA,’ and ‘Aa3′ ratings respectively to the Los Angeles Department of Water and Power’s (LADWP) $150 million water system revenue bonds, 2009 series, and cited a rating outlook of stable. The water system revenue bonds are scheduled for pricing on Jan. 26-27, 2009.
LADWP, the nation’s largest municipal utility, issues tax-exempt revenue bonds to finance capital improvements designed to upgrade facilities to improve service and reliability for customers. Proceeds from the water system revenue bond sales will help finance ongoing water system capital improvements such as replacing or upgrading trunk lines, distribution mains, tanks, pumps, regulator stations and other infrastructure. The LADWP also recently received similarly strong ratings on power system revenue bonds which were sold last November.
“Our high bond ratings are a testament to LADWP’s fiscal health, responsibility, and operating strength and will enable us to generate low-cost bonds to finance much-needed water infrastructure improvements, which ultimately will significantly benefit our ratepayers,” said Lee Kanon Alpert, president of the Board of Water and Power Commissioners
“Given the substantial turmoil in the markets, it is important that we maintain strong bond ratings to ensure lower interest rates, which enable us to invest more ratepayers’ money into upgrading our aging water system infrastructure,” said LADWP CEO and General Manager David Nahai. “Once again, the ratings agencies have expressed strong confidence in our finances, operations and management.”
In assigning the ‘AA’ rating to LADWP’s water system revenue bonds, Fitch cited the Department’s strong debt service coverage levels, sound management planning, diversity of water supplies, and the economic strength and depth of its service area.
Standard & Poors said the ‘AA’ ratings and stable outlook reflect LADWP’s strengths such as a deep and diverse service area, sound financial metrics, financial flexibility due to competitive rates, and recent rate increases to respond to large capital needs and rising operating costs.
Moody’s assigned the ‘Aa3’ rating based on LADWP’s large and diverse, citywide customer base, healthy operating strength, and numerous other factors. Moody’s also said LADWP is well positioned to meet its demand growth without relying on additional water imports through a renewed commitment to improving water use efficiency combined with additional investment in water recycling.
LADWP’s water system includes 6,700 miles of mainlines, 573 miles of trunk lines, 76 tanks, 86 pump stations, 231 regulator stations, and 6,600 large meters. LADWP is engaged in a water infrastructure improvement program that includes replacing almost 2 million feet of mainline in 10 years. In fiscal year 2007-08, for instance, LADWP completed 70,000 feet of mainline replacement and will step that up to 90,000 feet in 2008-09.