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New Issue:

MOODY'S ASSIGNS P-1 LETTER OF CREDIT BACKED RATING TO TURLOCK IRRIGATION DISTRICT SUBORDINATE REVENUE COMMERCIAL PAPER WARRANTS SERIES A (NON-AMT) AND SERIES B (FEDERALLY TAXABLE)

21 Jul 2011

$100,000,000 IN DEBT AFFECTED. RATING BASED ON LETTER OF CREDIT PROVIDED BY BANK OF AMERICA, N.A.

Fully Supported
CA

Moody's Rating

ISSUE

RATING

Ser. A

P-1

  Sale Amount

$50,000,000

  Expected Sale Date

07/28/11

  Rating Description

CP backed by LOC

 

Ser. B

P-1

  Sale Amount

$50,000,000

  Expected Sale Date

07/28/11

  Rating Description

CP backed by LOC

 

Opinion

NEW YORK, Jul 21, 2011 -- Moody's Investors Service has assigned a rating of P-1 to the Turlock Irrigation District Subordinated Revenue Commercial Paper Warrants Series A (Non-AMT) and Series B (Federally Taxable) (collectively, the Notes). The Notes were authorized by a Resolution in July, 2011.

SUMMARY RATING RATIONALE

The rating is based upon the letter of credit provided by Bank of America, N.A. ("the Bank"), the structure and legal protections of the transaction which ensures timely payment of principal and interest to noteholders, and Moody's evaluation of the credit quality of the Bank. Moody's currently rates Bank of America, N.A. Aa3 for long-term obligations and Prime-1 for short-term obligations. The Aa3 long-term rating is on review for downgrade.

DETAILED CREDIT DISCUSSION

The Commercial Paper Notes

Turlock Irrigation District (the District or Issuer) will issue its notes to finance and refinance various capital improvements for which the District is responsible. The resolution and the issuing and paying agent agreement authorize the issuance of up to $100,000,000 of notes. The Series A notes can be issued on an interest bearing basis only. The Series B notes can be issued at a discount.

Each note will be of a denomination greater than $100,000; will mature no more than 270 days from issuance, but in no event later than the fifteenth day prior to the stated expiration date of the letter of credit. Prior to issuance the issuing and paying agent shall determine that the amount available to be drawn under the letter of credit to pay principal and interest of maturing notes equals or exceeds the principal amount of and interest (or stated amount in the case of notes issued at a discount) on all notes to be outstanding after such issuance. Notes outstanding are notes issued for which payment has not been made or for which rollover proceeds are not available for payment of maturing notes.

Letter of Credit

The letter of credit is sized to cover principal and 270 days of interest at the maximum rate (12%) on the Notes. The aggregate face amount of notes outstanding shall not exceed the stated amount under the letter of credit. Conforming draws for payment of principal and interest received by the Bank by 9:30 a.m., Los Angeles time on a business day will be honored by 12:30 p.m., Los Angeles time on the same

business day.

The issuing and paying agent will draw on the letter of credit to make all payments of principal and interest when due at maturity. Drawings for payment of principal and interest of the Notes under the letter of credit will be automatically reinstated by the Bank upon the Bank's receipt of reimbursement funds from the issuing and paying agent. The Bank will be reimbursed for each draw with the proceeds from the sale of rollover notes, or with funds from the Issuer. The Notes are not subject to redemption prior to maturity.

Reimbursement Agreement Defaults

If there is an event of default under the reimbursement agreement, the Bank may send to the issuing and paying agent a no-issuance notice or final drawing notice. Upon receipt of such notices, the issuing and paying agent will cease issuing additional notes. Upon receipt of a final drawing notice from the Bank, the issuing and paying agent will draw within two business days for principal of outstanding Notes and interest that has accrued and will accrue to maturity and will pay principal and interest on the Notes as they mature. The letter of credit terminates the earliest of (a) 15 days following the issuing and paying agent 's receipt of the final draw notice or (b) the honoring of such final draw in connection with the final draw notice. Upon receipt of only a no-issuance notice, the issuing and paying agent shall cease issuing notes and draw on the letter of credit as the Notes mature. In this case the letter of credit will terminate upon the reduction of the available commitment to zero.

Substitution of the Letter of Credit

The Issuer has the right to provide a substitute letter of credit. Any substitution of the letter of credit must occur at least one business day prior to the stated expiration date of the letter of credit and go into effect on a date on which all notes then outstanding are scheduled to mature, but not until after all such notes have been paid pursuant to a draw on the prior letter of credit.

Expiration/Termination of the Letter of Credit

The letter of credit provided by the Bank will terminate upon the earliest of: (i) July 25, 2014, the stated expiration date; (ii) the date on which the Bank receives written notice from the issuing and paying agent that a substitution of the letter of credit has occurred; (iii) receipt by the Bank of notice from the Issuing and paying agent that no notes are outstanding (other than those secured by a substitute letter of credit) and no more issuance will occur; (iv) the earliest to occur of: (a) 15 days following the issuing and paying agent's receipt of final draw notice from the Bank as a result of an event of default under the reimbursement agreement or (b) the Bank's honoring of the draw in connection with such notice; and (v) the final draw on the existing letter of credit has been paid and the stated amount of the letter of credit has been reduced to zero.

KEY CONTACTS

Issuing and Paying Agent: U.S. Bank National Association

Dealer: Citigroup

WHAT COULD MAKE THE RATING GO UP

Not applicable.

WHAT COULD MAKE THE RATING GO DOWN

The rating on the applicable Notes could be lowered if the short-term rating of the Bank was downgraded.

PRINCIPAL METHODOLOGY USED

The principal methodology used in this rating was Moody's Methodology for Rating U.S. Public Finance Transactions Based on the Credit Substitution Approach published in August 2009.

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

Emily Korot
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, Inc.
250 Greenwich Street
New York, NY 10007
USA

MOODY'S ASSIGNS P-1 LETTER OF CREDIT BACKED RATING TO TURLOCK IRRIGATION DISTRICT SUBORDINATE REVENUE COMMERCIAL PAPER WARRANTS SERIES A (NON-AMT) AND SERIES B (FEDERALLY TAXABLE)
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 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.

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