OREANDA-NEWS. Fitch Ratings has downgraded to 'F1' from 'F1+' the short-term rating assigned to the $100,000,000 Department of Water and Power of the City of Los Angeles (LADWP), CA, water system variable rate demand revenue bonds, 2001 series B, subseries B-4.

The short-term rating action is in connection with: (i) the substitution of the liquidity support provided by Wells Fargo Bank, National Association (rated 'AA/F1+', Stable Outlook) in the form of a Standby Bond Purchase Agreement (SBPA), with a substitute SBPA to be issued by Citibank, N. A. (rated 'A+/F1', Stable Outlook); and (ii) the mandatory tender of the bonds, which will occur on July 25, 2016.

KEY RATING DRIVERS

The short-term 'F1' rating is based on the liquidity support provided by Citibank, N. A. in the form of a substitute SBPA, which has a stated expiration date of July 24, 2019, unless extended or earlier terminated, during the daily and weekly interest rate modes only. The long-term rating continues to be based on the rating assigned to the LADWP's water system revenue bonds. The Rating Outlook is Stable, for the long-term rating. For more information on the long-term rating, see the press release dated April 5, 2016, available on Fitch's website at www. fitchratings. com.

The substitute SBPA provides for the payment of the principal component of purchase price plus an amount equal to 34 days of interest calculated at a maximum rate of 12%, based on a year of 365 days for tendered bonds during the daily and weekly rate modes in the event that the proceeds of a remarketing of the bonds are insufficient to pay the purchase price following an optional or mandatory tender. The substitute SBPA will expire on July 24, 2019, the stated expiration date, unless such date is extended; upon conversion to a mode other than daily or weekly; or upon the occurrence of certain events of default which result in a mandatory tender or other events of default related to the credit of the bonds which result in an automatic and immediate termination. The remarketing agent is Stifel, Nicolaus & Company, Incorporated.

RATING SENSITIVITIES

The short-term rating reflects the short-term rating that Fitch maintains on the bank providing liquidity support, and will be adjusted upward or downward in conjunction with the short-term rating of the bank and, in some cases, the long-term rating of the bonds. The long-term rating is exclusively tied to the creditworthiness of the bonds and will reflect all changes to that rating.