Bank Debt

AWR has access to a syndicated credit facility, which expires in May 2018. In October 2016, AWR elected to increase the aggregate commitment as permitted under the terms of the facility agreement from $100.0 million to $150.0 million. The aggregate effective amount that may be outstanding under letters of credit is $25.0 million. AWR has obtained letters of credit, primarily for GSWC, in the aggregate amount of $9.9 million, with fees of 0.65% including: (i) a $5.4 million letter of credit representing a percentage of the outstanding American Recovery and Reinvestment Act (“ARRA”) funds received by GSWC for reimbursement of capital costs related to the installation of meters in GSWC’s Arden-Cordova water system, (ii) letters of credit in an aggregate amount of $340,000 as security for GSWC’s business automobile insurance policy, (iii) a letter of credit, in an amount of $585,000 as security for the purchase of power, (iv) a $15,000 irrevocable letter of credit pursuant to a franchise agreement with the City of Rancho Cordova, and (v) an irrevocable letter of credit in the amount of $3.6 million, pursuant to a settlement agreement with Southern California Edison Company to cover GSWC’s commitment to pay the settlement amount. Letters of credit outstanding reduce the amount that may be borrowed under the revolving credit facility. There were no compensating balances required.

Loans can be obtained at the option of AWR and bear interest at rates based on credit ratings and Euro rate margins. In April 2016, Standard & Poor's Rating Services ("S&P") affirmed the A+ credit rating and stable outlook on both AWR and GSWC. S&P's debt ratings range from AAA (highest rating possible) to D (obligation is in default). In December 2016, Moody's Investors Service ("Moody's") affirmed its A2 rating with a stable outlook for GSWC.

At December 31, 2016, there was $90.0 million outstanding under this facility. At times, AWR borrows under this facility and provides loans to its subsidiaries in support of their operations, on terms that are similar to that of the credit facility.

AWR’s short-term borrowing activities (excluding letters of credit) for the years ending December 31, 2016 and 2015 were as follows:



	December 31,
(in thousands, except percent)	2016			2015
Balance Outstanding at December 31,	$	90,000		$	28,000
Interest Rate at December 31,	1.46		%	1.09		%
Average Amount Outstanding	$	59,261		$	4,112
Weighted Average Annual Interest Rate	1.20		%	0.92		%
Maximum Amount Outstanding	$	96,000		$	37,000

All of the letters of credit are issued pursuant to the syndicated revolving credit facility. The syndicated revolving credit facility contains restrictions on prepayments, disposition of property, mergers, liens and negative pledges, indebtedness and guaranty obligations, transactions with affiliates, minimum interest coverage requirements, a maximum debt to capitalization ratio and a minimum debt rating. Pursuant to the credit agreement, AWR must maintain a minimum interest coverage ratio of 3.25 times interest expense, a maximum total funded debt ratio of 0.65 to 1.00 and a minimum Moody’s Investor Service or S&P debt rating of Baa3 or BBB-, respectively. As of December 31, 2016, 2015 and 2014, AWR was in compliance with these requirements. As of December 31, 2016, AWR had an interest coverage ratio of 7.07 times interest expense, a debt ratio of 0.46 to 1.00 and a debt rating of A+ by S&P.