KEY RATING DRIVERS:
The long-term 'AA' rating is based on a subordinate lien on net system revenues with sound debt service coverage, very healthy liquidity, strong management, a solid service area and a high but manageable debt burden. For more information on the long-term rating, see Fitch's
The short-term 'F1+' rating is based on the liquidity support provided by
The SBPA provides for the payment of the principal component of purchase price plus an amount equal to 35 days of interest calculated at a maximum rate of 12%, based on a year of 365 days for tendered bonds during the weekly rate mode 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 SBPA will expire on
The bonds will be issued in the weekly rate mode, but may be converted to a daily, long-term, or bond interest term rate. While bonds bear interest in the weekly rate mode, interest is paid on the first Wednesday of each month, commencing
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; (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 provide funds to prepay all of the outstanding Eastern Municipal Water District Water and Sewer Revenue Refunding Variable Rate Certificates of Participation Series 2008E and to pay costs of issuance of the 2014A Bonds.
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. The long-term rating is exclusively tied to the creditworthiness of the bond obligor and will reflect all changes to that rating.
Additional information is available at www.fitchratings.com.
-- 'U.S. Municipal Structured Finance Criteria' (
-- 'Rating Guidelines for Variable-Rate Demand Obligations and Commercial Paper Issued with External Liquidity Support' (
U.S. Municipal Structured Finance Criteria
Rating Guidelines for Variable-Rate Demand Obligations and Commercial Paper Issued with External Liquidity Support
Joseph Staffa, +1-212-908-0829
Source: Fitch Ratings
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