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Rating Action:

Moody's affirms VMIG 1 of Public Utility District No. 1 of Chelan County, WA Consolidated System Revenue Bonds Refunding Series 2008B

16 May 2018

New York, May 16, 2018 -- Moody's Investors Service has affirmed the VMIG 1 of Chelan County Public Utility District 1, Washington Consolidated System Revenue Bonds Refunding Series 2008B (Non-AMT) (the Bonds) in conjunction with the upcoming delivery of a replacement Standby Bond Purchase Agreement (SBPA) to be provided by Barclays Bank, PLC (the Bank). The long-term rating on the Bonds will remain Aa3.

RATINGS RATIONALE

Upon the effective date of the substitute SBPA, scheduled for June 20, 2018, the VMIG 1 will be derived from the credit quality of the Bank as the liquidity provider and our assessment of the likelihood of an early termination of the liquidity facility without a mandatory purchase of the Bonds. Events that would cause termination of the liquidity commitment without a mandatory purchase funded by the SBPA are directly related to the credit quality of Public Utility District No. 1 of Chelan County, Washington (the District). Accordingly, the likelihood of any such event is reflected in the Aa3 long-term rating of the Bonds.

Our current short-term counterparty risk assessment (CR Assessment) of Barclays Bank, PLC is P-1(cr).

FACTORS THAT COULD LEAD TO AN UPGRADE

- Short-term: Not applicable

FACTORS THAT COULD LEAD TO A DOWNGRADE

- Short-term: Moody's downgrades the CR Assessment of the Bank or the long-term rating of the Bonds.

The Bank's obligation under the SBPA may be automatically terminated or suspended upon:

- failure to pay principal or interest when due on the Bonds, or on debt on parity with the Bonds;

- the bankruptcy or insolvency of the District;

- the long term unenhanced ratings assigned to the Bonds or parity bonds are reduced below investment grade, suspended or withdrawn by Moody's and each other rating agency then rating the Bonds;

- a governmental authority with jurisdiction over the District declares or rules that any provision of the SBPA, the Bonds, or the Resolution relating to the obligation of the District to pay principal or interest on the Bonds or parity bonds, or the lien on or pledge of the revenues securing the Bonds or parity bonds to be null and void, invalid and unenforceable;

- the District shall repudiate or otherwise deny any provision of the SBPA, the Bonds, or the Resolution relating to the obligation of the District to pay principal or interest on the Bonds or parity bonds, or the lien on or pledge of the revenues securing the Bonds or parity bonds;

- the District shall claim that the SBPA, the Bonds or the Resolution is not valid or binding on the District or repudiate its obligations under the SBPA, the Bonds, the Resolution or its obligation to pay or repay any parity bonds;

- the District fails to pay, stay, discharge, dismiss or satisfy any final, non-appealable money judgment of at least $15,000,000 within 60 days of the entry of such judgment;

- the District shall initiate any legal proceedings to seek an adjudication that the SBPA, the Bonds, the Resolution or its obligation to pay or repay the Bonds is not valid or binding on the District.

The Bonds will remain in the weekly rate mode and pay interest on the first Wednesday of each month. The interest rate on the Bonds is convertible, in whole or part, to the daily, commercial paper, or fixed rate modes. Upon any such conversion, the Bonds will be subject to mandatory tender. The SBPA only supports the Bonds while in the weekly and daily rate modes.

The SBPA may be substituted. Upon any substitution the Bonds will be subject to mandatory tender on the business day prior to the substitution date, unless the trustee receives written notice from each rating agency then rating the Bonds that the rating will not be reduced or withdrawn. The liquidity facility will terminate on the date of receipt by the Bank of notice from the trustee stating the SBPA is terminated because an alternate credit facility has been provided and become effective under the Resolution.

The Bonds are subject to mandatory tender as follows: (i) upon any interest rate conversion; (ii) at the end of each commercial paper rate period; (iii) on the business day immediately preceding the expiration date of the SBPA; (iv) on the business day preceding the substitution date of the liquidity facility unless the rating is affirmed; (v) on the business day prior to termination of the SBPA by the District; and (v) no later than fifteen days following the trustee's receipt of notice of termination from the Bank due to an event of default under the SBPA.

Bonds in the daily rate mode may be optionally tendered on any business day with notice to the tender agent by 11:00 a.m. on such business day. Bonds in the weekly rate mode may be optionally tendered on any business day upon notice from bondholders to the tender agent on a business day not less than seven days prior to the purchase date.

The SBPA covers the full principal amount of Bonds outstanding plus 40 days of interest at 10%, the maximum rate applicable to the Bonds. The SBPA provides sufficient coverage for the Bonds while in the daily and weekly rate modes. The SBPA is available to pay purchase price to the extent remarketing proceeds received are insufficient.

Draws made on the SBPA received at or prior to 12:00 p.m., New York City time, will be honored by 2:30 p.m., New York City time, on the same business day. Draws made under the liquidity facility will be reinstated upon reimbursement of such drawing.

The commitment under the SBPA will terminate upon the earliest to occur of: (i) July 1, 2022, the stated expiration date; (ii) the date the Bank receives notice from the trustee that the SBPA is terminated due to either (a) the delivery of an alternate credit facility; (b) no Bonds remain outstanding under the Resolution; or (c) the interest rate on all of the Bonds has been converted to a rate mode other than daily or weekly; (iii) the 30th day following the trustee's receipt of notice of termination from the Bank due to an event of default under the SBPA; (iv) voluntary termination by the District; or (v) an automatic termination event.

METHODOLOGY

The principal methodology used in this rating was Variable Rate Instruments Supported by Conditional Liquidity Facilities published in March 2017. Please see the Rating Methodologies 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 certain 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 certain regulatory disclosures in relation to the credit rating action on the support provider and in relation to each particular credit rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides certain 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.

Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.

Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.

Please see the ratings tab on the issuer/entity page on www.moodys.com for additional regulatory disclosures for each credit rating.

Michael Loughlin
Lead Analyst
Municipal Supported Products
Moody's Investors Service, Inc.
7 World Trade Center
250 Greenwich Street
New York 10007
US
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653

Joann Hempel
Additional Contact
Municipal Supported Products
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653

Releasing Office:
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653

No Related Data.
© 2018 Moody’s Corporation, Moody’s Investors Service, Inc., Moody’s Analytics, Inc. and/or their licensors and affiliates (collectively, “MOODY’S”). All rights reserved.

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