State water agency debt rating raised

The California agency that sold $11 billion of municipal bonds to buy power during the state’s electricity crisis had the rating on the debt raised Tuesday by Moody’s Investors Service.

The company said it raised the rating on the California Department of Water Resources’ $9.5 billion of remaining power bonds one rank to Aa3, the fourth-highest. The change, which follows a similar move last year, reflects confidence in the department’s ability to manage its risk until most of the power contracts expire in four years.

The department “is well- positioned to manage power and commodity market risks through 2011,” Moody’s said.

The agency sold the bonds in October and November 2002 to finance the purchase of electricity for investor-owned utilities when wholesale prices soared because of shortages and manipulation of the market by power companies, including Enron Corp.

A $7-billion portion of the bonds sold in November ranked as the largest single municipal debt sale up until that time and now ranks third, after later issues by the states of California and Illinois, according to Thomson Financial.

From Times Wire Services