Rating Action: Moody’s affirms Irvine Ranch Water District’s (CA) Aa1 GO and COP rating
Global Credit Research – 05 Aug 2015
Total debt outstanding is $545M; Rating applies to $345M
New York, August 05, 2015 — Moody’s Investors Service has affirmed the Aa1 rating on Irvine Ranch Water District, CA’s (IRWD) outstanding GO bonds and Certificates of Participation (COPs). The rating applies to $345 million in debt outstanding.

SUMMARY RATING RATIONALE

The Aa1 incorporates the large size and economic strength of the district’s service area, stable and healthy financial position, and its high operating ratio which is partially mitigated by strong level of reserves and solid debt service coverage. The rating also reflects the district’s sufficient water supply, adequate legal structure, low debt ratio and strong management team.

OUTLOOK

Outlooks are generally not applicable for local government credits of this size.

WHAT COULD MAKE THE RATING GO UP

• Large sustained increases in debt service coverage

• Improved operating ratio

• Substantially strengthened water supply position

WHAT COULD MAKE THE RATING GO DOWN

• Trend of materially lower debt service coverage

• Significant erosion of reserves

• Material challenge to water supply

OBLIGOR PROFILE

The district serves a population of approximately 340,000 and includes the entire city of Irvine and all or a portion of the cities of Orange, Costa Mesa, Lake Forest, Tustin, Newport Beach and portions of unincorporated Orange County. The district’s total service connections are approximately 210,000 accounts and primarily residential.

LEGAL SECURITY

The district’s outstanding GO bonds are secured by a pledge of unlimited property tax assessments (GO) on various improvement districts within the district, and by a senior claim on net revenues of the system. Given the varied credit quality of the improvement districts’ GO pledges, the rating on these bonds is based upon the net revenue pledge.

The district’s outstanding COPs are secured by a senior claim on net revenues of the system, excluding property tax assessments levied to repay General Obligation debt.

USE OF PROCEEDS

Not applicable

PRINCIPAL METHODOLOGY

The principal methodology used in this rating was US Municipal Utility Revenue Debt published in December 2014. Please see the Credit Policy page on www.moodys.com for a copy of this methodology.

REGULATORY DISCLOSURES

For ratings issued on a program, series or category/class of debt, this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series or category/class of debt or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody’s rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the rating action on the support provider and in relation to each particular rating action for securities that derive their credit ratings from the support provider’s credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.

The following information supplements Disclosure 10 (“Information Relating to Conflicts of Interest as required by Paragraph (a)(1)(ii)(J) of SEC Rule 17g-7”) in the regulatory disclosures made at the ratings tab on the issuer/entity page on www.moodys.com for each credit rating:

Moody’s was not paid for services other than determining a credit rating in the most recently ended fiscal year by the person that paid Moody’s to determine this credit rating.

Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.

Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody’s legal entity that has issued the rating.

Please see the ratings tab on the issuer/entity page on www.moodys.com for additional regulatory disclosures for each credit rating.