Fitch Assigns 'F1+' S-T Rating to Metro Water District of Southern CA 2016 Series B

NEW YORK--()--Fitch Ratings has assigned an 'F1+' short-term rating to the Metropolitan Water District of Southern California (MWDSC) special variable rate water revenue refunding bonds, 2016 Series B consisting of 2016 Series B-1 and 2016 Series B-2.

KEY RATING DRIVERS:

The short-term 'F1+' ratings are based on the liquidity support provided by Landesbank Hessen-Thuringen Girozentrale, acting through its New York Branch, (Helaba, rated 'A+/F1+', Stable Outlook) in the form of two Standby Bond Purchase Agreements (SBPAs). For information on the long-term ratings assigned to the bonds see the press release dated Sept. 8, 2016 entitled 'Fitch Rates Metropolitan Water District of Southern Calif. Var Rate Water Revs 'AA+'; Outlook Stable', which is available at www.fitchratings.com.

The SBPAs provide for the payment of the principal component of purchase price plus an amount equal to 34 days of interest calculated at a maximum rate of 12%, based on a year of 365 days for tendered bonds during the daily and weekly rate modes in the event that the proceeds of a remarketing of the bonds are insufficient to pay the purchase price following an optional or mandatory tender. The SBPAs will expire on Sept. 19, 2019, the stated expiration date, unless such date is extended; upon conversion to a mode other than the daily or weekly rate mode; or upon the occurrence of certain events of default which result in a mandatory tender or other events of default related to the credit of the bond obligor which result in an automatic and immediate termination. The remarketing agents for the bonds are RBC Capital Markets and US Bancorp. The bonds are expected to be delivered on or about Sept. 20, 2016.

The bonds will be issued in the daily rate mode, but may be converted to a weekly, flexible, index, bond interest term or long period rate mode. While bonds bear interest in the daily rate mode, interest is paid on the first business day of each month, commencing Oct. 3, 2016. Holders of bonds bearing interest in the daily and weekly rate modes may tender their bonds for purchase with the requisite prior notice. The Paying Agent is obligated to make timely draws on the SBPAs to pay purchase price in the event of insufficient remarketing proceeds, and in connection with the expiration or termination of the SBPAs, except in the case of the credit-related events permitting immediate termination or suspension of the SBPA.

Funds drawn under the SBPA are held uninvested, and are free from any lien prior to that of the bondholders. The bonds are subject to mandatory tender: (1) upon conversion of the interest rate to a mode other than the daily or weekly mode; (2) upon expiration, substitution or termination of the SBPA; and (3) following the receipt of written notice from the bank of an event of default under the SBPA, directing such mandatory tender. Optional and mandatory redemption provisions also apply to the bonds.

Bond proceeds will be used to refund MWDSC's outstanding tax-exempt flexible rate revolving notes, Series 2016 B-1 and water revenue refunding bonds, 2008 Series A-2.

RATING SENSITIVITIES

The short-term rating reflects the short-term rating that Fitch maintains on the bank providing liquidity support and will be adjusted upward or downward in conjunction with the short-term rating of the bank and, in some cases, the long-term rating of the bond obligor.

Additional information is available at www.fitchratings.com.

Applicable Criteria

Rating Criteria for Variable-Rate Demand Obligations and Commercial Paper Issued with External Liquidity Support (pub. 28 Jan 2016)

https://www.fitchratings.com/site/re/876837

U.S. Municipal Structured Finance Criteria (pub. 23 Feb 2015)

https://www.fitchratings.com/site/re/862222

Additional Disclosures

Dodd-Frank Rating Information Disclosure Form

https://www.fitchratings.com/creditdesk/press_releases/content/ridf_frame.cfm?pr_id=1011484

Solicitation Status

https://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=1011484

Endorsement Policy

https://www.fitchratings.com/jsp/creditdesk/PolicyRegulation.faces?context=2&detail=31

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.

Contacts

Fitch Ratings
Primary Analyst
Linda Friedman
Senior Directory
+1-212-908-0727
Fitch Ratings, Inc.
33 Whitehall Street
New York, NY 10004
or
Secondary Analyst
Richard Park
Director
+1-212-908-0289
or
Committee Chairperson
Joseph Staffa
Senior Director
+1-212-908-0829
or
Media Relations
Elizabeth Fogerty, +1 212-908-0526
elizabeth.fogerty@fitchratings.com

Contacts

Fitch Ratings
Primary Analyst
Linda Friedman
Senior Directory
+1-212-908-0727
Fitch Ratings, Inc.
33 Whitehall Street
New York, NY 10004
or
Secondary Analyst
Richard Park
Director
+1-212-908-0289
or
Committee Chairperson
Joseph Staffa
Senior Director
+1-212-908-0829
or
Media Relations
Elizabeth Fogerty, +1 212-908-0526
elizabeth.fogerty@fitchratings.com