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

30 Jan 2026   |   New York

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KBRA affirms the long-term rating of AA+ for the City of Los Angeles, CA Wastewater System's (the "System") Senior Lien Revenue Bonds and AA for the System's Subordinate Lien Revenue Bonds. The Outlook for 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 history of effectively managing the System’s large capital improvement program and implementing timely rate adjustments to meet operating, capital, and debt service requirements.
  • Strong debt service coverage levels well above indenture requirements.
  • Broad, diverse service area economy. Sound rate affordability for the System’s 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 may affect the City’s ability to impose rate increases.
  • The potential for increasingly frequent extreme weather events may lead to greater fluctuation in wastewater flows and increased capital investment needs, reinforcing the need for rate setting flexibility.

Rating Sensitivities

For Upgrade

  • Sustained improvement in debt service coverage and liquidity.

For Downgrade

  • Substantial increase in debt levels pursuant to the amended, more permissive ABT that results in a sustained decline in debt service coverage levels.
  • Limitations on rate-setting flexibility related to political or ratepayer initiatives or declining rate affordability that negatively impacts the System’s ability to address operating, maintenance or capital needs.

To access ratings and relevant documents, click here.

Methodologies

Disclosures

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 www.kbra.com.

About KBRA

Kroll Bond Rating Agency, LLC (KBRA), one of the major credit rating agencies (CRA), is a full-service CRA 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 (DRO) by the Ontario Securities Commission for issuers of asset-backed securities to file a short form prospectus or shelf prospectus. KBRA is also recognized as a Qualified Rating Agency by Taiwan’s Financial Supervisory Commission and is recognized by the National Association of Insurance Commissioners as a Credit Rating Provider (CRP) in the U.S.

Doc ID: 1013251