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The following is a press release from Moody's Investors Service: NEW YORK, June 24, 2010 -- Moody's Investors Service has affirmed the P-1 rating on the $400 million City of Los Angeles Wastewater System Commercial Paper Revenue Notes, Series A, B & C (the Notes) in connection with the issuance of a substitute Credit Agreement provided by State Street Bank and Trust Company for Series A, California State Teachers' Retirement System for Series B and Wells Fargo Bank, N.A. for Series C. The P-1 rating is based on the Credit Agreement and the likelihood of termination of the Agreement without payment of the commercial paper Notes. Events which would cause the Credit Agreement to terminate without payment of the Notes are directly related to the credit quality of the City of Los Angeles (the City) and the Los Angeles Wastewater System (the System). The substitution is scheduled to occur on June 28, 2010. State Street Bank and Trust Company (for Series A), California State Teachers' Retirement System (for Series B) and Wells Fargo Bank, N.A. (for Series C) are rated Aa2/P-1, Aa3/P-1 and Aa2/P-1, respectively, for their long-term and short-term obligations. For more information on the long-term creditworthiness of the System, please see the research report dated January 29, 2009. At that time, Moody's assigned a Aa3 municipal scale rating to the System's senior lien wastewater revenue bonds. We also affirmed the A1 municipal scale rating on the System's subordinate lien wastewater revenue bonds. On April 16, 2010 the senior and subordinate lien ratings were recalibrated to Aa2 and Aa3 respectively on the global rating scale. THE COMMERCIAL PAPER PROGRAM The Issuing and Paying Agent (the IPA), U.S Bank National Association, will issue Notes upon receipt of issuance instructions from either the City or the commercial paper dealers (Barclays Capital Inc. and Morgan Stanley & Co Inc.) on behalf of the City. The authorized amount of this program is $400 million. However, no Notes may be issued if such issuance would cause the aggregate principal amount of Notes outstanding and interest due at maturity to exceed the amount provided for under the Credit Agreement for each series. The Credit Agreement is sized to cover $300 million of principal amount of Notes plus 270 days' interest at the maximum rate of 12%. The available commitment for each series is $100 million of principal amount of Notes plus interest . Additionally, each Note issued shall mature no later than 270 days from the date of issuance or the fifth day preceding the expiration date of the Credit Agreement. The IPA shall stop issuing Notes following its receipt of a no-issuance notice from the banks. Following payment at maturity of all outstanding Notes, the Credit Agreement will then terminate. The banks may automatically terminate or suspend payment under the Credit Agreement upon any of the following events: (i) the City fails to make a principal or interest payments when due on the reimbursement obligations under the Credit Agreement; (ii) the City fails to make any payment when due with respect to any Senior Lien Bonds or Subordinate Bonds; (iii) a court of competent jurisdiction enters a final nonappeable order or judgment to the effect that any Subordinate Bonds are illegal or unenforceable; (iv) the Credit Agreement, the Amended and Restated Issuing and Paying Agent Agreement, any Bank Note, any Commercial Paper Note, the Subordinate Resolution, or any provision of the foregoing relating to or otherwise affecting the City's obligation to pay the principal of or interest on any Subordinate Bond or the pledge of Revenues, shall at any time for any reason cease to be valid and binding on the City or shall be declared to be null and void by any court or governmental authority or agency having jurisdiction over the City, or the validity or the enforceability thereof shall be contested by the City, in a judicial or administrative proceeding;(v) the validity or the enforceability of any provision of the Senior Lien Resolution relating to or otherwise affecting the City's obligation to pay the principal of or interest on any Senior Lien Bond or the pledge of Revenues shall at any time be contested by the City in a judicial or administrative proceeding, (vi) the City fails to pay when due a final, unappealable judgment or order for the payment of money in excess of $10 million and for which insurance proceeds shall not be available shall be rendered against the City or System that is payable from the Revenues of the System and such judgment or order shall continue unstayed, undischarged, unbonded or unsatisfied for a period of 90 days; (vii) certain bankruptcy or insolvency events of the City or System; (viii) the City imposes a debt moratorium, debt restructuring, debt adjustment or comparable restriction on repayment when due and payable of the principal and/or interest on Senior Lien or Subordinate Bonds; (ix) the City or the System shall generally be unable to pay its debts as they become due; and (x) each of the rating agencies suspends, withdraws, or downgrades below the investment grade the ratings of the Senior Lien or the Subordinate Bonds. The Credit Agreement provides that any future bank facility that the City enters into relating to the System that includes more restrictive covenants than those included in the Credit Agreement shall be automatically incorporated into the Credit Agreement. However, this provision shall not be applicable with respect to immediate termination or suspension events. The IPA is directed to draw on the Credit Agreement in order to pay principal and interest on the Notes to the extent funds from the City or proceeds of rollover notes are insufficient. The banks will be reimbursed for each draw with funds provided by the City or from the proceeds of rollover Notes. CREDIT AGREEMENT The Credit Agreement has been sufficiently sized to cover $300 million principal amount of Notes ($100 million for each series) plus 270 days' interest at the maximum rate of 12%. Draws made on the Credit Agreement received by the Bank at or prior to 12:00 p.m. (NYC time) will be honored by 2:30 p.m. (NYC time) on the same business day. The commitment will be reinstated following the repayment by the City in the amount of such draw. Substitution of the Credit Agreement (or of the banks providing the Credit Agreement) is permitted under the First Supplemental Resolution. Pursuant to such resolution, the City is required to receive written evidence from each rating agency then rating the Notes that the rating on the Notes will not be reduced or withdrawn as a result of the substitution. The Credit Agreement will terminate upon the earlier to occur of: (a) the stated expiration date, June 28, 2012; (b) the date on which the available commitment has been reduced to zero; (c) upon an immediate termination event due to an event of default under the Credit Agreement; or (d) upon payment of all outstanding commercial paper Notes following the issuing and paying agent's receipt of notice of no-issuance from the banks. PRINCIPAL METHODOLOGY USED The principal methodology used in rating this transaction was Moody's Variable Rate Instruments Supported by Third-Party Liquidity Providers. The methodology is available on www.moodys.com in the Rating Methodologies sub-directory under the Research & Ratings tab. Other methodologies and factors that may have been considered in the process of rating this issuer can also be found in the Rating Methodologies sub-directory on Moody's website. LAST RATING ACTION The last rating action with respect to the Los Angeles Wastewater Enterprise was on March 29, 2009 when a municipal finance scale rating of Aa3 was assigned to the system's senior lien wastewater revenue bonds. That rating was subsequently recalibrated to Aa2 on April 16, 2010. ANALYSTS: Michael Wertz, Analyst, Public Finance Group, Moody's Investors Service Robert Azrin, Backup Analyst, Public Finance Group, Moody's Investors Service CONTACTS: Journalists: (212) 553-0376 Research Clients: (212) 553-1653 Copyright 2010 Moody's Investors Service, Inc. and/or its licensors and affiliates (collectively, "MOODY'S"). All rights reserved. CREDIT RATINGS ARE MOODY'S INVESTORS SERVICE, INC.'S ("MIS") CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES. MIS 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. CREDIT RATINGS DO NOT ADDRESS ANY OTHER RISK, INCLUDING BUT NOT LIMITED TO: LIQUIDITY RISK, MARKET VALUE RISK, OR PRICE VOLATILITY. CREDIT RATINGS ARE NOT STATEMENTS OF CURRENT OR HISTORICAL FACT. CREDIT RATINGS DO NOT CONSTITUTE INVESTMENT OR FINANCIAL ADVICE, AND CREDIT RATINGS ARE NOT RECOMMENDATIONS TO PURCHASE, SELL, OR HOLD PARTICULAR SECURITIES. CREDIT RATINGS DO NOT COMMENT ON THE SUITABILITY OF AN INVESTMENT FOR ANY PARTICULAR INVESTOR. MIS ISSUES ITS CREDIT RATINGS WITH THE EXPECTATION AND UNDERSTANDING THAT EACH INVESTOR WILL MAKE ITS OWN STUDY AND EVALUATION OF EACH SECURITY THAT IS UNDER CONSIDERATION FOR PURCHASE, HOLDING, OR SALE. 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. All information contained herein (MORE TO FOLLOW) Dow Jones Newswires June 24, 2010 21:42 ET (01:42 GMT)