|
Desalter Revenue Refunding Bonds, Series 2016A; Rating: Aa3; Rating Type: Underlying LT; Sale Amount: $67,690,000; Expected Sale Date: 06/22/2016; Rating Description: Revenue: Government Enterprise
Summary Rating Rationale
Moody's Investors Service has assigned an Aa3 rating to the Chino Basin Desalter Authority (CDA) Revenue Refunding Bonds, Series 2016A. The bonds have an expected par value of $67.7 million. We have also affirmed the rating on the Authority's existing $76.1 million of outstanding revenue bonds.
The rating reflects the Chino Basin's satisfactory debt service coverage from pledged revenues, sound liquidity, stable water supply availability, and largely standard legal covenants with the exception of a weaker than typical additional bonds test.
Rating Outlook
Outlooks are usually not assigned to local government credits with this amount of debt outstanding.
Factors that Could Lead to an Upgrade
Significant and sustained improvement of debt service coverage
Materially improved liquidity
Factors that Could Lead to a Downgrade
Weakening of debt service coverage
Material deterioration of cash
Water supply pressures
Legal Security
The bonds are secured by the CDA's pledge of revenues from its water purchase agreements, Metropolitan Water District rebates, and interest income. The water purchase agreements are take-or-pay contracts from program participants who pay their share of costs as part of their individual operations and maintenance.
Use of Proceeds
Proceeds of the sale will be used to refund the CDA's Series 2008A Revenue Bonds.
Obligor Profile
The authority is a joint exercise of powers agency by and among JCSD, SARWC, the cities of Chino, Chino Hills, Norco and Ontario, and IEUA with the power, among others, to design, finance, lease, purchase, acquire, construct, operate, maintain, sell, hypothecate or otherwise dispose of the Project for the purposes of the production, treatment and distribution of water to the Project Participants. In 2008, WMWD was added as member of the authority.
|
