Bank Debt

AWR has access to a $150.0 million syndicated credit facility, which expires in May 2018. Management intends to renew the credit facility prior to its expiration. 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 $6.3 million, with fees of 0.65% including: (i) a $5.4 million letter of credit related to American Recovery and Reinvestment Act 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, and (iv) a $15,000 irrevocable letter of credit pursuant to a franchise agreement with the City of Rancho Cordova. Letters of credit outstanding reduce the amount that may be borrowed under the revolving credit facility. AWR is not required to maintain any compensating balances.

Loans may be obtained under this credit facility at the option of AWR and bear interest at rates based on credit ratings and Euro rate margins. In May 2017, Standard and Poor’s Global Ratings (“S&P”) reaffirmed an A+ credit rating with a 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 2017, Moody's Investors Service ("Moody's") affirmed its A2 rating with a revised rating outlook from stable to positive for GSWC.

At December 31, 2017, there was $59.0 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, 2017 and 2016 were as follows:



	December 31,
(in thousands, except percent)	2017			2016
Balance Outstanding at December 31,	$	59,000		$	90,000
Interest Rate at December 31,	2.28		%	1.46		%
Average Amount Outstanding	$	65,242		$	59,261
Weighted Average Annual Interest Rate	1.69		%	1.20		%
Maximum Amount Outstanding	$	102,500		$	96,000

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, 2017, 2016 and 2015, AWR was in compliance with these requirements. As of December 31, 2017, AWR had an interest coverage ratio of 7.54 times interest expense, a debt ratio of 0.42 to 1.00 and a debt rating of A+ by S&P.