S&P Global Ratings lowered its long-term and underlying ratings on Pacifica, Calif.'s wastewater revenue bonds to ?AA-? from ?AA?. The outlook is stable. The downgrade reflects our view of the system?s increased financial risks, as represented by its decision to substantially spend down cash reserves while facing substantial capital needs, as well as the reduction in debt service coverage (DSC) to below-peer-average levels. The bonds are secured by the net revenue of the city's wastewater system. Key bond provisions include a rate covenant set at 1.25x annual debt service and an additional bonds test set at 1.25x maximum annual debt service. For the purpose of the rate covenant, the city is permitted to include transfers from a rate stabilization fund
