Fitch has assigned an investment-grade AA- rating to a new $45.9 million letter of credit issued by Citibank to the Castaic Lake Water Agency.

The 3-year letter of credit isn’t tied to any specific construction project; rather the money is available when the water agency needs it.

Fitch also reaffirmed its ratings of CLWA’s outstanding debt. It assigned an AA rating to $67.9 million in outstanding senior certificates of participation and an AA- rating to another $230.2 million in outstanding COPs, which CLWA has used to build its various water treatment and pipeline projects.

In its announcement, Fitch said CLWA’s “financial position is solid, although there has been some fluctuation in operating performance from year to year.”

Fitch Ratings analyst Julie Seebach said whether plus or minus, anything in the AA category represents “a very high credit quality.”

She said the rating is calculated against the credit worthiness of other water agencies across the country.

Fitch noted that CLWA’s “existing debt ratios are somewhat high” but its “capital needs are manageable and proposed borrowings are not expected to materially increase the agency’s debt burden.”

“They borrow a lot of money,”Seebach said.

That’s common in growth areas, said Valerie Pryor, CLWA’s administrative services manager.

“We’re only half-way built out,” she said.

Seebach said Fitch determines debt ratios by looking at outstanding debt per customer, debt per capita, and debt to plant.

A CLWA analysis of its debt shows a low ratio of debt per capita and and an extremely low ratio as a percentage of assessed valuation.

But it shows a very high percentage – 26.4 percent – goes to debt service. Debt service of 15 to 20 percent is considered high.

On that score, CLWA is preparing to take advantage of the low interest rates available in the current sour economy in order to reduce the interest it has to pay to bond holders, as other government agencies have been doing. (The county of Los Angeles recently decided to refinance its Mello-Roos bonds to cut the debt service payments that are passed on to property owners in Stevenson Ranch.)

Pryor said CLWA has processed the necessary paperwork to refinance its outstanding COPs if market conditions indicate the agency would see a minimum 3-percent savings.

Looking to the future, Fitch said CLWA plans to borrow another $199 million from now to 2017, but Pryor said the figure includes projects that are already underway and nearing completion. About $90 million in new borrowing will be needed in that time frame, she said.

The biggest ticket item on the horizon for the Santa Clarita Valley’s state water wholesaler is a recycled water system, she said.