ROYAL BANK OF CANADA Fitch Assigns ST 'F1+' Ratings to the LADWP PWR SYS VRDBs 2021 Series A.
Fitch Ratings assigns a Short-Term 'F1+' rating to the
KEY RATING DRIVERS
The Short-Term 'F1+' rating is based on the liquidity support provided by
The bonds have a Long-Term rating of 'AA-/Stable Outlook'. For information on the Department of Water and Power of the City of Los Angeles Power System's Long-Term credit rating, see press release dated
The SBPA provides 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 when bonds bear interest in the daily and weekly rate modes in the event that remarketing proceeds are insufficient to pay purchase price following an optional or mandatory tender. The SBPA has a stated expiration date of
Each subseries of the bonds will be issued in the daily rate mode, but the respective subseries may be converted to a weekly rate mode, commercial paper, term or fixed interest rate period. While bonds bear interest in the daily or weekly rate modes, interest is paid on the first business day of each month, commencing
Funds drawn under SBPA are held uninvested, and are free from any lien prior to that of the bondholders. The bonds are subject to mandatory tender: (1) on each conversion date; (2) upon termination, replacement or expiration 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 finance costs of capital improvements to the Power System and pay certain costs of issuance.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive rating action/upgrade:
The short-term rating assigned to the bonds is the highest short-term rating and cannot be upgraded.
Factors that could, individually or collectively, lead to negative rating action/downgrade:
The short-term rating assigned to the bonds will be adjusted downward in conjunction with the short-term rating of the bank providing the SBPA and, in some cases, the long-term rating of the bonds.
BEST/WORST CASE RATING SCENARIO
International scale credit ratings of Sovereigns, Public Finance and Infrastructure issuers have a best-case rating upgrade scenario (defined as the 99th percentile of rating transitions, measured in a positive direction) of three notches over a three-year rating horizon; and a worst-case rating downgrade scenario (defined as the 99th percentile of rating transitions, measured in a negative direction) of three notches over three years. The complete span of best- and worst-case scenario credit ratings for all rating categories ranges from '
ESG Considerations
The Environmental, Social and Governance Relevance Score conforms to that of LADWP and the
The highest level of ESG credit relevance, if present, is a score of '3'. ESG issues are credit neutral or have only a minimal credit impact on the entity(ies), either due to their nature or the way in which they are being managed by the entity(ies). For more information on Fitch's ESG Relevance Scores, visit www.fitchratings.com/esg.
REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF RATING
The principal sources of information used in the analysis are described in the Applicable Criteria.
PUBLIC RATINGS WITH CREDIT LINKAGE TO OTHER RATINGS
The short-term rating is linked to the rating of the bank providing liquidity support and the long-term ratings assigned to the bonds.
VIEW ADDITIONAL RATING DETAILS
Additional information is available on www.fitchratings.com
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