Key Rating Drivers Portfolio Credit Risk: The pool consists of 146 obligors, with the top 10 participants representing approximately 49% of the total portfolio; the largest obligor is 16% of the portfolio. Obligor security is strong as nearly all obligors are secured by net utility-system revenue pledges. Approximately 91% of the program’s portfolio consists of obligors exhibiting investment-grade credit quality. These preceding pool characteristics translate to an implied pool quality as calculated by Fitch’s PSM of a strong ‘A’/’A-‘. Finance Structure: Fitch’s cash flow modelling demonstrates that program resources are sufficient to withstand hypothetical pool defaults in excess of Fitch’s ‘AAA’ liability rating stress hurdle, as derived using the PSM, without causing an interruption in bond payments. The program’s financial structure is sound, supported by a projected minimum annual debt service coverage (DSC) of about 1.7x. Program Management: The program is managed by the SWRCB. Program management adheres to a formal underwriting policy that includes, among other things, minimum coverage requirements for obligors. There have been no pledged loan payment defaults in the CWSRF or DWSRF programs.
Thu 22 Feb, 2024