KBRA assigns a long-term rating of AA+ to the Delta Diablo, CA Series 2026 Wastewater Revenue Certificates of Participation. The rating Outlook is Stable.

Key Credit Considerations

The rating actions reflect the following key credit considerations:

Credit Positives:

• The essential nature of the wastewater system, which serves a diverse customer base of more than 218,000 residents.
• Historically strong debt service coverage and liquidity.
• Management’s demonstrated willingness to raise rates to maintain solid financial performance.
• Significant pay-as-you-go capital financing.

Credit Challenges:

• Aging infrastructure that necessitates a substantial capital program and will materially increase leverage.
• Substantial, though measured, planned drawdown of reserves.
• Exposure to construction-cost and regulatory risks associated with the Project.

Rating Sensitivities

For Upgrade:

• Material progress on the CIP while maintaining adequate debt service coverage and liquidity metrics.

For Downgrade:

• Material capital or operational cost overruns, absent corresponding rate increases, that lead to declines in debt service coverage beyond current projections.
• Unanticipated changes in regulatory requirements that lead to additional debt far exceeding current plans.

To access ratings and relevant documents, click here.

Methodology

• Public Finance: U.S. Municipal Retail Utility Revenue Bond Rating Methodology

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: 1017234

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