Press Release|Public Finance

KBRA Affirms Ratings for the City of Los Angeles, CA Wastewater System Senior Lien Revenue Bonds, and Wastewater System Subordinate Lien Revenue Bonds; Outlook is Stable

9 Feb 2024   |   New York


KBRA affirms the long-term rating of AA+ with a Stable Outlook for the City of Los Angeles, CA Wastewater System Senior Lien Revenue Bonds. The long-term rating of AA with a Stable Outlook for the Wastewater System Subordinate Lien Revenue Bonds is also affirmed. The Outlook on both liens is Stable.

Key Credit Considerations

The ratings were affirmed because of the following key credit considerations:

Credit Positives

  • Experienced management team with a track record of implementing timely rate adjustments to meet operating, capital, and debt service requirements.
  • Strong legal provisions which, after planned amendments and revisions, will continue to include a 1.25x rate covenant and ABT under the Senior General Resolution, and a 1.10x rate covenant and ABT for combined Senior/Subordinate Bonds under the Subordinate General Resolution.
  • Large, stable service area economy and largely residential customer base.

Credit Challenges

  • While the City has covenanted to collect rates, fees and charges that meet the requirements of the Resolutions, California Proposition 218 affects the City’s ability to impose rate increases.
  • The increased frequency of extreme weather patterns may lead to greater fluctuation in wastewater flows and increased capital investment needs, reinforcing the need for rate setting flexibility.
  • Regulatory compliance related to effluent discharge limits may require significant capital expenditures.

Rating Sensitivities

For Upgrade:

  • Sustained reduction in System leverage.
  • Continued improvement in System liquidity.

For Downgrade:

  • Sustained decline in debt service coverage or liquidity.
  • Limitations on rate-setting flexibility related to voter initiatives or declining rate affordability that negatively impact the ability to address System operating, maintenance or capital needs.

To access rating and relevant documents, click here.



A description of all substantially material sources that were used to prepare the credit rating and information on the methodology(ies) (inclusive of any material models and sensitivity analyses of the relevant key rating assumptions, as applicable) used in determining the credit rating is available in the Information Disclosure Form(s) located here.

Information on the meaning of each rating category can be located here.

Further disclosures relating to this rating action are available in the Information Disclosure Form(s) referenced above. Additional information regarding KBRA policies, methodologies, rating scales and disclosures are available at

About KBRA

Kroll Bond Rating Agency, LLC (KBRA) is a full-service credit rating agency registered with the U.S. Securities and Exchange Commission as an NRSRO. Kroll Bond Rating Agency Europe Limited is registered as a CRA with the European Securities and Markets Authority. Kroll Bond Rating Agency UK Limited is registered as a CRA with the UK Financial Conduct Authority. In addition, KBRA is designated as a designated rating organization by the Ontario Securities Commission for issuers of asset-backed securities to file a short form prospectus or shelf prospectus. KBRA is also recognized by the National Association of Insurance Commissioners as a Credit Rating Provider.

Doc ID: 1003211

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