OREANDA-NEWS. Fitch Ratings assigns an 'AA' rating and Stable Outlook to \$50 million of bank bonds associated with Eastern Municipal Water District, California's (the district) series 2015A variable-rate subordinate water and sewer revenue refunding bonds (the bonds), should the bonds ever be held by the liquidity provider.

The district expects to execute a standby bond purchase agreement (SBPA) effective June 23, 2015 with Bank of Tokyo-Mitsubishi UFJ, Ltd., NA (the bank; rated 'A/F1'; Outlook Stable by Fitch) providing liquidity support for the bonds. The bank bond rating is assigned to the bonds, but will only become applicable if they cannot be remarketed and are purchased by the bank.

Based on a review of the terms governing bank bonds specified in the SBPA, Fitch believes that the incremental risk associated with bank bonds does not have a material impact on the district's long-term credit rating. Legal provisions are standard with a three-year amortization period beginning after 90 days and a maximum interest rate of 12% on any bank bonds.

RATING SENSITIVITIES

The 'AA' bank bond rating is based on the district's long-term credit quality and is sensitive to changes in the long-term rating.