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Kroll Bond Rating Agency Assigns Long-Term Rating of AA to the City of Los Angeles, CA General Obligation Bonds

August 26, 2014



NEW YORK--(BUSINESS WIRE)-- Kroll Bond Rating Agency (KBRA) assigns a long-term rating of AA with a stable outlook to the general obligation debt of the City of Los Angeles, California. This rating applies to all of the City of Los Angeles’ outstanding general obligation bonds. The City has $991 million of GO bonds outstanding at the current time. This rating is based on KBRA’s U.S. Local Government General Obligation Rating Methodology, published on May 31, 2012.

KBRA views the City’s organizational structure and financial management policies and procedures as providing a strong framework for managing the City’s financial operations. The financial condition of Los Angeles is strong based on its management of its General Fund budget, increased levels of reserves and its strong liquidity over the last several years. KBRA considers the City’s improved finances from FY 2009 through FY 2013 to be largely the result of the City’s pro-active budgeting and strict fiscal monitoring practices. The City’s reserve levels have increased since FY 2010, with total General Fund unassigned fund balance increasing to 8.8% in FY 2013. The City has met and modestly exceeded its Reserve Fund policy of 5% of General Fund expenditures for the last two fiscal years; the Reserve Fund is included in the City’s unassigned General Fund balance. KBRA views the City’s overall liquidity levels to be strong. The City has manageable debt burden and a direct debt portfolio with minimal variable rate exposure. KBRA also views the economic base of the City of Los Angeles as strong and diversified.

The stable outlook reflects KBRA’s expectation that the City will continue to manage its structural deficit and increase the levels of operating reserves and unassigned fund balances. The stable outlook also reflects the expectation that the City will continue to manage its pension obligations as well as continue to actuarially fund its OPEB obligations.

Please use the following links to view KBRA’s full report and tear-sheet on the City: City of Los Angeles, General Obligation Bonds

About Kroll Bond Rating Agency

KBRA is registered with the U.S. Securities and Exchange Commission as a Nationally Recognized Statistical Rating Organization (NRSRO). In addition, KBRA is recognized by the National Association of Insurance Commissioners (NAIC) as a Credit Rating Provider (CRP).



Kroll Bond Rating Agency

Analytical Contacts:

Kate Hackett, 646-731-2304

Managing Director

khackett@kbra.com

or

Alice Cheng, 646-731-2403

Senior Analyst

acheng@kbra.com

or

Karen Daly, 646-731-2347

Senior Managing Director

kdaly@kbra.com


Source: Kroll Bond Rating Agency


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