Moodys.com
Close
Please Note
We brought you to this page based on your search query. If this isn't what you are looking for, you can continue to Search Results for ""
The maximum number of items you can export is 3,000. Please reduce your list by using the filtering tool to the left.
Close
Close
Email Research
Recipient email addresses will not be used in mailing lists or redistributed.
Recipient's
Email

Use semicolon to separate each address, limit to 20 addresses.
Enter the
characters you see
Close
Email Research
Thank you for your interest in sharing Moody's Research. You have reached the daily limit of Research email sharings.
Close
Thank you!
You have successfully sent the research.
Please note: some research requires a paid subscription in order to access.
New Issue:

MOODY'S ASSIGNS A2 RATING TO TURLOCK IRRIGATION DISTRICT'S SUBORDINATED REVENUE BONDS; OUTLOOK STABLE

19 Jul 2011

EXISTING REVENUE BONDS DOWNGRADED TO A2

Electric Utilities
CA

Moody's Rating

ISSUE

RATING

First Priority Subordinated Revenue Refunding Bonds, Series 2011

A2

  Sale Amount

$213,000,000

  Expected Sale Date

07/28/11

  Rating Description

SUBORDINATED REVENUE BONDS

 

 
Moody's Outlook   Stable
 

Opinion

NEW YORK, Jul 19, 2011 -- Moody's assigns A2 ratings to Turlock Irrigation District's 213M First Priority Subordinated Revenue Refunding Bonds, Series 2011. At the same time, Moody's has downgraded the rating of existing revenue bonds, as well as the long term debt obligations of Tuolumne Wind Project Authority and Walnut Energy Center Authority, to A2. The rating outlook is stable.

The downgrade reflects Moody's expectations of declines in debt service coverage to levels, resulting from additional leverage being undertaken by TID in order to finance additional generation capacity, which are more consistent with an A2 rating.

The A2 rating of Turlock Irrigation District ("TID") reflects its dominant market position as a provider of electricity to a service area of nearly 100,000 retail customers. Moody's notes that the unregulated ability to set rates is an important credit strength which insulates the utility from cost increases.

Turlock Irrigation District is a publicly owned utility which provides electricity and irrigation services to a 662 square mile service area located in Stanislaus, Merced and Tuolumne Counties in California.

USE OF PROCEEDS:

The proceeds of the bond issue will be used to refund existing subordinated revenue notes, fund the debt service reserve and pay transaction costs associated with the bond issuance.

Legal Security:

The First Priority Subordinated Revenue Refunding Bonds, Series 2011, are secured by a pledge of revenues after operations and maintenance expense and revenue bond debt service from TID, which covenants to fix rates which will be sufficient to yield 1.15x debt service coverage on the First Priority Subordinated Revenue Refunding Bonds, as well as 1.15x debt service coverage on any outstanding Revenue Bonds.

For additional revenue and subordinated bond indebtedness, TID is also required to meet a 1.15x debt service coverage test.

A debt service reserve will be established with a funding requirement of average annual debt service.

KEY RATING FACTORS

MACRO FUNDAMENTALS CONTINUE TO BE CHALLENGING THOUGH NO FURTHER DETERIORATION EXPECTED

TID is a well established utility and has exclusive jurisdiction in its 662 square mile service area located in Stanislaus, Merced and Tuolumne Counties in California to provide electric service. TID also supplies wholesale water and irrigation services within its irrigation district boundaries.

TID's key credit strengths are its ability for cost recovery through an unregulated rate-setting mechanism in combination with its dominant market position. Over time TID has demonstrated the ability and willingness to raise rates, which is a key support for the A2 rating.

The service area continues to exhibit weakness which is reflected in the A2 rating. Moody's Economy.com notes that "The economy will be among the last to exit recession as the jobless rate stays above 18% through 2011. The metro area will lag the nation through the forecast horizon as an unfavorable industrial structure weighs on growth."

Moody's expects this weakness to limit load demand growth, particularly in the commercial and industrial customer segments, however further notes that this is not expected to materially increase retail bad debts expense due to TID's policy of holding deposits against certain retail customers.

DEBT SERVICE COVERAGES EXPECTED TO DECLINE

TID has undertaken considerable increases in leverage in recent years as a result of [i] capacity expansions to meet increased load demand and [ii] purchases of renewable assets in order to meet mandated renewable generation levels. Despite the revenue growth which has occurred in 2010, the net effect of these factors has been a decline in debt service coverage levels.

Over the next few years, further weakness is expected as additional debt service related to [i] the Tuolumne Wind Project and [ii] debt service brought forward relating to the Almond Power Plant expansion, increases TID's consolidated debt service, such that Moody's expects debt service coverage levels to decrease to around 1.1x - 1.2x over 2012 - 2013, which is more consistent with an A2 rating level.

TID expects to implement rate increases in 2012 and 2013. Moody's views these rate increases as necessary to preserve TID's financial profile.

REASONABLE CAPITAL REQUIREMENTS AND WELL POSITIONED TO MEET MANDATED RENEWABLE GENERATION LEVELS

TID is well positioned to meet regulatory requirements with respect to mandatory renewable energy generation levels. Following its acquisition of the Tuolumne Wind Project in 2009, TID currently sources approximately 25% of its generation through renewable sources, which is supportive of its A2 rating.

As any state regulatory requirement with regards to renewable generation levels will apply across California, any cost increases as a result of regulatory requirements will be applicable to all utilities and hence is not expected to materially alter TID's cost competitiveness.

TID's major capital expenditures currently relate to the expansion of the Almond Power Plant from 50MW to 224MW - this expansion is currently on time and budget and is scheduled to be complete before the peak of 2012. Following the completion of this expansion, TID will not require any major capital expenditures related to increasing generation capacity over the next few years, which is supportive of the rating.

ABOVE AVERAGE LIQUIDITY SUPPORTS A2 RATING

At December 31, 2010 TID reported 123M of unrestricted cash in operating accounts and rate stabilization funds, equivalent to 165 days of cash on hand, which is considered above average for its A2 rating.

At the same date, net working capital was negative, reflecting short term financing in place. Moody's expects this to reduce as TID replaces shorter tenor financing with longer tenor financing as part of upcoming financings.

Pledges on TID's cash under derivative agreements entered into for the purposes of hedging gas supply costs are not required absent a material downgrade in TID's credit quality, which is positive for its liquidity profile as it increases the certainty of cash balances being available when required.

Outlook

The outlook of TID is stable, reflecting the appropriateness of its financial profile for the A2 rating level.

What Could Change the Rating -UP

It is unlikely that TIDs rating will be upgraded in the short term, given the continued economic challenges the service area is facing as well as the expectations of declines in debt service coverage levels.

What Could Change the Rating-DOWN

The rating could be downgraded if TID fails to increase rates in order to maintain its financial profile or encounters a material reduction in days cash on hand.

The principal methodology used in this rating was U.S. Public Power Electric Utilities published in April 2008. Please see the Credit Policy page on www.moodys.com for a copy of this methodology .

REGULATORY DISCLOSURES

For ratings issued on a program, series or category/class of debt, this announcement provides relevant regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series or category/class of debt or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides relevant regulatory disclosures in relation to the rating action on the support provider and in relation to each particular rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides relevant regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.

Information sources used to prepare the rating are the following: parties involved in the ratings and public information.

Moody's considers the quality of information available on the rated entity, obligation or credit satisfactory for the purposes of issuing a rating.

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

Michael O'Connor
Analyst
Public Finance Group
Moody's Investors Service

Dan Aschenbach
Backup Analyst
Public Finance Group
Moody's Investors Service

Contacts

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


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

MOODY'S ASSIGNS A2 RATING TO TURLOCK IRRIGATION DISTRICT'S SUBORDINATED REVENUE BONDS; OUTLOOK STABLE
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.

MOODY’S CREDIT RATINGS AND MOODY’S PUBLICATIONS ARE NOT INTENDED FOR USE BY RETAIL INVESTORS AND IT WOULD BE RECKLESS AND INAPPROPRIATE FOR RETAIL INVESTORS TO USE MOODY’S CREDIT RATINGS OR MOODY’S PUBLICATIONS WHEN MAKING AN INVESTMENT DECISION. IF IN DOUBT YOU SHOULD CONTACT YOUR FINANCIAL OR OTHER PROFESSIONAL ADVISER.

ALL INFORMATION CONTAINED HEREIN IS PROTECTED BY LAW, INCLUDING BUT NOT LIMITED TO, COPYRIGHT LAW, AND NONE OF SUCH INFORMATION MAY BE COPIED OR OTHERWISE REPRODUCED, REPACKAGED, FURTHER TRANSMITTED, TRANSFERRED, DISSEMINATED, REDISTRIBUTED OR RESOLD, OR STORED FOR SUBSEQUENT USE FOR ANY SUCH PURPOSE, IN WHOLE OR IN PART, IN ANY FORM OR MANNER OR BY ANY MEANS WHATSOEVER, BY ANY PERSON WITHOUT MOODY’S PRIOR WRITTEN CONSENT.

CREDIT RATINGS AND MOODY’S PUBLICATIONS ARE NOT INTENDED FOR USE BY ANY PERSON AS A BENCHMARK AS THAT TERM IS DEFINED FOR REGULATORY PURPOSES AND MUST NOT BE USED IN ANY WAY THAT COULD RESULT IN THEM BEING CONSIDERED A BENCHMARK.

All information contained herein is obtained by MOODY’S from sources believed by it to be accurate and reliable. Because of the possibility of human or mechanical error as well as other factors, however, all information contained herein is provided “AS IS” without warranty of any kind. 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 or in preparing the Moody’s publications.

To the extent permitted by law, MOODY’S and its directors, officers, employees, agents, representatives, licensors and suppliers disclaim liability to any person or entity for any indirect, special, consequential, or incidental losses or damages whatsoever arising from or in connection with the information contained herein or the use of or inability to use any such information, even if MOODY’S or any of its directors, officers, employees, agents, representatives, licensors or suppliers is advised in advance of the possibility of such losses or damages, including but not limited to: (a) any loss of present or prospective profits or (b) any loss or damage arising where the relevant financial instrument is not the subject of a particular credit rating assigned by MOODY’S.

To the extent permitted by law, MOODY’S and its directors, officers, employees, agents, representatives, licensors and suppliers disclaim liability for any direct or compensatory losses or damages caused to any person or entity, including but not limited to by any negligence (but excluding fraud, willful misconduct or any other type of liability that, for the avoidance of doubt, by law cannot be excluded) on the part of, or any contingency within or beyond the control of, MOODY’S or any of its directors, officers, employees, agents, representatives, licensors or suppliers, arising from or in connection with the information contained herein or the use of or inability to use any such information.

NO WARRANTY, EXPRESS OR IMPLIED, AS TO THE ACCURACY, TIMELINESS, COMPLETENESS, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OF ANY CREDIT RATING OR OTHER OPINION OR INFORMATION IS GIVEN OR MADE BY MOODY’S IN ANY FORM OR MANNER WHATSOEVER.

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.”

Additional terms for Australia only: Any publication into Australia of this document is pursuant to the Australian Financial Services License of MOODY’S affiliate, Moody’s Investors Service Pty Limited ABN 61 003 399 657AFSL 336969 and/or Moody’s Analytics Australia Pty Ltd ABN 94 105 136 972 AFSL 383569 (as applicable). This document is intended to be provided only to “wholesale clients” within the meaning of section 761G of the Corporations Act 2001. By continuing to access this document from within Australia, you represent to MOODY’S that you are, or are accessing the document as a representative of, a “wholesale client” and that neither you nor the entity you represent will directly or indirectly disseminate this document or its contents to “retail clients” within the meaning of section 761G of the Corporations Act 2001. MOODY’S credit rating is an opinion as to the creditworthiness of a debt obligation of the issuer, not on the equity securities of the issuer or any form of security that is available to retail investors.

Additional terms for Japan only: Moody's Japan K.K. (“MJKK”) is a wholly-owned credit rating agency subsidiary of Moody's Group Japan G.K., which is wholly-owned by Moody’s Overseas Holdings Inc., a wholly-owned subsidiary of MCO. Moody’s SF Japan K.K. (“MSFJ”) is a wholly-owned credit rating agency subsidiary of MJKK. MSFJ is not a Nationally Recognized Statistical Rating Organization (“NRSRO”). Therefore, credit ratings assigned by MSFJ are Non-NRSRO Credit Ratings. Non-NRSRO Credit Ratings are assigned by an entity that is not a NRSRO and, consequently, the rated obligation will not qualify for certain types of treatment under U.S. laws. MJKK and MSFJ are credit rating agencies registered with the Japan Financial Services Agency and their registration numbers are FSA Commissioner (Ratings) No. 2 and 3 respectively.

MJKK or MSFJ (as applicable) hereby disclose that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by MJKK or MSFJ (as applicable) have, prior to assignment of any rating, agreed to pay to MJKK or MSFJ (as applicable) for ratings opinions and services rendered by it fees ranging from JPY125,000 to approximately JPY250,000,000.

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

​​​​​​
Moodys.com