Correction: Fitch Rates Moulton Niguel Water District, California's $60MM COPs 'AA+'; Outlook Stable.

SAN FRANCISCO -- (This is an update of a release originally issued Nov. 18, 2009. It reflects changes related to the issuance amount, the resulting impact to cash flow projections, and the sale date).

Fitch assigns an 'AA+' rating to the Moulton Niguel Water District's (the district) $60.5 million certificates of participation (the certificates) 2009 series A and B. Series B will be Federally Taxable Build America Bonds. The specific allocation of the total $60.5 million of certificates between the tax-exempt Series A and taxable Series B will be determined at the time of pricing. The certificates are scheduled to price the week of December 7 via negotiated sale. Fitch also assigns the 'AA+' rating on the district's outstanding parity certificates of participation series 1993 and 2003. The Rating Outlook on the certificates is Stable.

The 'AA+' rating reflects the district's role as the water and wastewater service supplier to an affluent service area of 167,000 people, strong financial performance with good debt service coverage levels and very strong liquidity position, low rates and very manageable capital plan requiring no additional debt. Credit concerns focus on the district's 100% reliance on Metropolitan Water District (MWD) through the Municipal Water District of Orange County (MWDOC) for potable water. The key rating driver is the district's ability to sustain solid debt service coverage levels without rate stabilization fund transfers and continued very strong liquidity levels.

The district's financial performance has been strong with historic debt service coverage ranging from 2.0 times (x) to 4.8x from fiscal 2005 through 2009. Projected coverage levels will be at least 2.0x through 2014. Liquidity measures have been very strong with over one year of cash since 2005. At the end of fiscal 2009 (unaudited), unrestricted cash and investments totaled just over $108 million, equal to 844 days cash. With a manageable $117 million five year capital plan requiring no additional debt and approved rate increases through 2011, liquidity measures are expected to remain strong, well in excess of over one year of cash.

The district is a member agency of MWDOC and receives 100% of its potable water supply from MWDOC. MWDOC in turn, imports water which it buys primarily from MWD. MWD faces significant water supply challenges and cost pressures on imported water in southern California, which are expected to continue. The pressures also are expected to impact the cost of operations of underlying retailers to some degree. Nevertheless, the district's rates are among the lowest in the area, benefiting from the property tax revenues generated and collected by the district; these revenues account for about one-third of total district revenues. Currently, the average monthly water bill using 1,600 cubic-feet of water is $24, significantly less than the water portion of bills for other entities which also are highly dependent on imported water from MWD; wastewater charges are also low. Even with approved annual rate increases of 16.2% over the next two years, projected rates are expected to remain very affordable.

The district provides water, wastewater and recycled water services to approximately 167,000 people in southern Orange County. The district encompasses 36.5 square miles and includes the cities of Aliso Viejo, Laguna Niguel, significant portions of Laguna Hills and Mission Viejo and small portions of Dana Point and San Juan Capistrano.

Considerations for Taxable/Build America Bonds Investors:

The following sector credit profile is provided as background for investors new to the municipal market.

Water and Sewer Utility Revenue Bonds:

Municipal water and sewer utilities in the U.S. are enduring natural monopolies that typically have autonomous rate setting ability and provide highly essential services. The bonds are secured by a pledge of net revenues generated by the water and/or sewer system; and typically include structural legal protections such as rate covenants, debt service reserve requirements, and anti-dilution tests. As such, the sector exhibits extremely strong credit characteristics with minimal defaults. Reflective of this strong performance, the average water and sewer revenue bond rating is 'A+' with 53% at or above 'AA-', and approximately 6% rated 'BBB+' or below. Those with low investment-grade or below-investment-grade ratings generally have substantial capital programs, a high degree of leverage or weak financial flexibility as reflected in low cash levels, narrow debt service coverage and/or limited rate-raising flexibility. For additional information on these ratings, see Water and Sewer Revenue Bond Rating Guidelines Aug. 6, 2008.

Additional information is available at 'www.fitchratings.com'.

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