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Rating Update:

MOODY'S AFFIRMS Aa2/VMIG 1 LETTER OF CREDIT BACKED RATINGS OF THE BONDS OF IRVINE RANCH WATER DISTRICT CONSOLIDATED SERIES 1995 & 2008A.

15 Apr 2011

$80.5 MILLION OF DEBT AFFECTED. SUBSTITUTE LETTERS OF CREDIT PROVIDED BY SUMITOMO MITSUI BANKING CORPORATION

District Numbers 105, 140, 240 & 250
Fully Supported
CA

Opinion

NEW YORK, Apr 15, 2011 -- Moody's Investors Service has affirmed the Aa2/VMIG 1 ratings assigned to the Bonds of Irvine Ranch Water District Consolidated Series 1995 Constituting the Consolidated Several General Obligations of Improvement Districts 105, 140, 240 & 250 (the 1995 Bonds) and the Bonds of Irvine Ranch Water District Consolidated Series 2008A Constituting the Consolidated Several General Obligations of Improvement Districts 105, 113, 135, 161, 182, 213, 235, 250, 261 (the 2008A Bonds) in conjunction with the substitution of the current letters of credit securing the Bonds provided by State Street Bank and Trust (for the 1995 Bonds) and Landesbank Baden-Wuerttemberg (for the 2008A Bonds) with new direct-pay letters of credit to be provided by Sumitomo Mitsui Banking Corporation (the Bank) effective April 15, 2011.

SUMMARY RATING RATIONALE

The ratings are based upon the structure and legal protections of the transaction which ensure timely payments of principal, interest and purchase price to Bondholders, and Moody's evaluation of the credit quality of the Bank issuing the letters of credit. Moody's currently rates the Bank Aa2 for its long-term obligations and P-1 for its short-term obligations.

Interest Rate Modes and Payment

Upon the effective date of the substitution, the interest rate mode of the 1995 Bonds and 2008A Bonds (collectively, the Bonds) will be converted from the daily to the weekly mode. Following the conversion interest for the 1995 Bonds will be paid on the 1st business day of the month. Interest on the 2008A Bonds will continue to be paid on the 5th business day of each month. The Bonds may be converted in whole, by series, to bear interest at the daily, semiannual, annual, fixed, VIP pricing short term or VIP pricing long term rate modes. Bonds are subject to mandatory tender upon conversion of interest rate modes at a price of par plus accrued interest. Moody's ratings apply only while the Bonds bear interest in the weekly mode.

Additional Bonds

The trust indentures do not allow the issuance of additional bonds.

Flow of Funds

The trustee is instructed to draw on the Series 1995 letter of credit by 4:00 p.m., Eastern Time, on the business day prior to the date principal or interest on the 1995 Bonds in due in order to receive funds by 12:00 p.m., Eastern time, on the payment date. The trustee is also instructed to draw on the Series 1995 letter of credit, by 12:00 p.m., Eastern Time, on the purchase or acceleration date of the 1995 Bonds in order to receive funds by 3:00 p.m., Eastern time, on the purchase or acceleration date.

The trustee is instructed to draw on the Series 2008A letter of credit by 3:00 p.m., Eastern Time, on the business day prior to the date principal or interest on the 2008A Bonds in due in order to receive funds by 1:00 p.m., Eastern time, on the payment date. The trustee is also instructed to draw on the Series 2008A letter of credit, by 12:00 p.m., Eastern Time, on the purchase or acceleration date of the 2008A Bonds in order to receive funds by 2:45 p.m., Eastern time, on the purchase or acceleration date.

Bonds which are purchased by the Bank due to a failed remarketing are held by the trustee as and will not be released until the respective letter of credit has been fully reinstated in the amount of the purchase price drawn for such Bonds.

Direct Pay Letters of Credit

The letters of credit provided by the Bank are sized for the full principal amount plus 45 days of interest at the maximum interest rate of 12%. The letters of credit provide sufficient coverage for the Bonds while they bear interest in the weekly rate mode.

Draws on Letters of Credit

Conforming draws on the Series 1995 letter of credit for principal and/or interest received by the Bank by 4:00 p.m., Eastern Time, on a business day will be honored by 12:00 p.m., Eastern Time, on the next business day. Conforming draws for the payment of purchase price or acceleration payment received by the bank by 12:00 p.m., Eastern Time, will be honored by 3:00 p.m., Eastern Time, on the same business day.

Conforming draws on the Series 2008A letter of credit for principal and/or interest received by the Bank by 3:00 p.m., Eastern Time, on a business day will be honored by 1:00 p.m., Eastern Time, on the next business day. Conforming draws for the payment of purchase price or acceleration payment received by the bank by 12:00 p.m., Eastern Time, will be honored by 2:45 p.m., Eastern Time, on the same business day.

Reinstatement of Interest Draws

The interest component of each letter of credit will be automatically reinstated immediately following the Bank's honoring of such a drawing.

Substitution

Bonds are subject to mandatory tender on the effective date of the substitution of the respective letter of credit. The existing letters of credit shall be surrendered on the 5th business day following their substitution.

Reimbursement Agreement Defaults

The Bank may send written notice to the trustee stating that an event of default under the reimbursement agreements has occurred, and directing the trustee to cause a mandatory tender or acceleration of the respective series of Bonds.

With direction to cause a mandatory tender of the 1995 Bonds, the trustee shall cause a mandatory tender of the Bonds on a business day which is not more than 5 days following the trustee's receipt of such notice. With direction to cause a mandatory tender of the 2008A Bonds, the trustee shall cause a mandatory tender of the Bonds on a business day which is not more than 14 days following the trustee's receipt of such notice.

With direction to accelerate the Bonds, the trustee shall immediately declare the principal and interest on the respective Bonds to be due and payable and draw on the respective letter of credit. Interest on the 1995 will cease to accrue upon the trustee's receipt of acceleration funds. Interest on the 2008A will cease to accrue upon such declaration

Expiration / Termination of the Letters of Credit

The letters of credit will terminate on April 15, 2014, the stated expiration dates of the letters of credit.

Optional Tenders

Bondholders may elect to optionally tender their bonds on any business day while in the weekly rate mode by delivering notice to the trustee and remarketing agent by 5:00 p.m., Eastern Time, at least seven days prior.

Mandatory Tenders

The 1995 Bonds are subject to mandatory tender on the following dates: (i) on the effective date of any new interest period; (ii) on the effective date of an alternate letter of credit; (iii) On the 5th business day prior to the expiration of the letter of credit; (iv) on a business day, which is no later than 5 days, following the trustee's receipt of notice of an event of default under the reimbursement agreement with direction to cause a mandatory tender of the Bonds.

The 2008A Bonds are subject to mandatory tender on the following dates: (i) on the effective date of any new interest period; (ii) on the effective date of an alternate letter of credit; (iii) On the 5th business day prior to the expiration of the letter of credit; (iv) on a business day, which is no later than 14 days, following the trustee's receipt of notice of an event of default under the reimbursement agreement with direction to cause a mandatory tender of the Bonds.

Mandatory Redemptions

The 1995 Bonds are subject to mandatory sinking fund redemptions annually on January 1st.

The 2008A Bonds are subject to mandatory sinking fund redemptions annually on July 1st.

What Could Change the Rating-Up

Long-Term: The long-term rating on the Bonds could be raised if the long-term senior unsecured rating on the Bank was upgraded.

Short-Term: N/A

What Could Change the Rating-Down

Long-Term: The long-term rating on the Bonds could be lowered if the long-term senior unsecured rating on the Bank was downgraded.

Short-Term: The short-term rating on the Bonds could be lowered if the short-term senior unsecured rating on the Bank was downgraded.

Key Contacts

Trustee: Bank of New York Trust Company, N.A.

1995 Remarketing Agent: Citigroup Global Markets, Inc

2008A Remarketing Agent: Merrill Lynch, Pierce, Fenner & Smith, Inc.

Moody's Rating Methodology for Letter of Credit Supported Transactions published in August 2005.

Moody's adopts all necessary measures so that the information it uses in assigning a credit rating is of sufficient quality and from sources Moody's considers to be reliable including, when appropriate, independent third-party sources. However, Moody's is not an auditor and cannot in every instance independently verify or validate information received in the rating process.

Please see ratings tab on the issuer/entity page on Moodys.com for the last rating action and the rating history.

The date on which some Credit Ratings were first released goes back to a time before Moody's Investors Service's Credit Ratings were fully digitized and accurate data may not be available. Consequently, Moody's Investors Service provides a date that it believes is the most reliable and accurate based on the information that is available to it. Please see the ratings disclosure page on our website www.moodys.com for further information.

Please see the Credit Policy page on Moodys.com for the methodologies used in determining ratings, further information on the meaning of each rating category and the definition of default and recovery.

Analysts

Josephine Castro
Analyst
Public Finance Group
Moody's Investors Service

Robert Azrin
Senior Credit Officer
Public Finance Group
Moody's Investors Service

Contacts

Journalists: (212) 553-0376
Research Clients: (212) 553-1653


Moody's Investors Service
250 Greenwich Street
New York, NY 10007
USA

MOODY'S AFFIRMS Aa2/VMIG 1 LETTER OF CREDIT BACKED RATINGS OF THE BONDS OF IRVINE RANCH WATER DISTRICT CONSOLIDATED SERIES 1995 & 2008A.
No Related Data.
© 2019 Moody’s Corporation, Moody’s Investors Service, Inc., Moody’s Analytics, Inc. and/or their licensors and affiliates (collectively, “MOODY’S”). All rights reserved.

CREDIT RATINGS ISSUED BY MOODY'S INVESTORS SERVICE, INC. AND ITS RATINGS AFFILIATES (“MIS”) ARE MOODY’S CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES, AND MOODY’S PUBLICATIONS MAY INCLUDE MOODY’S CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES. MOODY’S DEFINES CREDIT RISK AS THE RISK THAT AN ENTITY MAY NOT MEET ITS CONTRACTUAL FINANCIAL OBLIGATIONS AS THEY COME DUE AND ANY ESTIMATED FINANCIAL LOSS IN THE EVENT OF DEFAULT OR IMPAIRMENT. SEE MOODY’S RATING SYMBOLS AND DEFINITIONS PUBLICATION FOR INFORMATION ON THE TYPES OF CONTRACTUAL FINANCIAL OBLIGATIONS ADDRESSED BY MOODY’S RATINGS. CREDIT RATINGS DO NOT ADDRESS ANY OTHER RISK, INCLUDING BUT NOT LIMITED TO: LIQUIDITY RISK, MARKET VALUE RISK, OR PRICE VOLATILITY. CREDIT RATINGS AND MOODY’S OPINIONS INCLUDED IN MOODY’S PUBLICATIONS ARE NOT STATEMENTS OF CURRENT OR HISTORICAL FACT. MOODY’S PUBLICATIONS MAY ALSO INCLUDE QUANTITATIVE MODEL-BASED ESTIMATES OF CREDIT RISK AND RELATED OPINIONS OR COMMENTARY PUBLISHED BY MOODY’S ANALYTICS, INC. CREDIT RATINGS AND MOODY’S PUBLICATIONS DO NOT CONSTITUTE OR PROVIDE INVESTMENT OR FINANCIAL ADVICE, AND CREDIT RATINGS AND MOODY’S PUBLICATIONS ARE NOT AND DO NOT PROVIDE RECOMMENDATIONS TO PURCHASE, SELL, OR HOLD PARTICULAR SECURITIES. NEITHER CREDIT RATINGS NOR MOODY’S PUBLICATIONS COMMENT ON THE SUITABILITY OF AN INVESTMENT FOR ANY PARTICULAR INVESTOR. MOODY’S ISSUES ITS CREDIT RATINGS AND PUBLISHES MOODY’S PUBLICATIONS WITH THE EXPECTATION AND UNDERSTANDING THAT EACH INVESTOR WILL, WITH DUE CARE, MAKE ITS OWN STUDY AND EVALUATION OF EACH SECURITY THAT IS UNDER CONSIDERATION FOR PURCHASE, HOLDING, OR SALE.

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Moody’s Investors Service, Inc., a wholly-owned credit rating agency subsidiary of Moody’s Corporation (“MCO”), hereby discloses that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by Moody’s Investors Service, Inc. have, prior to assignment of any rating, agreed to pay to Moody’s Investors Service, Inc. for ratings opinions and services rendered by it fees ranging from $1,000 to approximately $2,700,000. MCO and MIS also maintain policies and procedures to address the independence of MIS’s ratings and rating processes. Information regarding certain affiliations that may exist between directors of MCO and rated entities, and between entities who hold ratings from MIS and have also publicly reported to the SEC an ownership interest in MCO of more than 5%, is posted annually at www.moodys.com under the heading “Investor Relations — Corporate Governance — Director and Shareholder Affiliation Policy.”

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MJKK and MSFJ also maintain policies and procedures to address Japanese regulatory requirements.

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