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3/10/26, 9:55 AM Santa Ana Financing Authority, CA Water Revenue B I S&P Global Ratings <br />has a comprehensive long-term cald(tal improvement <br />CC��plan for continued <br />§f Vr eSiTYT� 1n renewal and replaceme_�cilit) Tr prove` e-n Support <br />; and required <br />growth projects. <br />Ratings <br />The negative outlook reflects our view that there is at least a one -in -three <br />chance that negative financial pressures persist in the water fund due to rising <br />costs, which could limit material improvement in liquidity levels. During the <br />outlook period, we will examine whether the city completes its rate study with <br />the assistance of an external consultant and implements its rate plan to <br />preserve the water system's financial profile. <br />We could lower the rating if the utility is unable to replenish its liquidity <br />reserves and restore them to healthy levels or if all -in DSC metrics decline <br />due to rising costs despite rate adjustments that would indicate erosion of <br />financial margins and, in turn, diminished credit quality. <br />We could revise the outlook to stable if the upcoming rate plan supports <br />maintenance of healthy all -in coverage and liquidity levels commensurate <br />with those of peers at the current rating, while the utility completes its capital <br />improvement plan while mitigating water supply constraints. <br />Certain terms used in this report, particularly certain adjectives used to <br />express our view on rating relevant factors, have specific meanings ascribed <br />to them in our criteria, and should therefore be read in conjunction with such <br />criteria. Please see Ratings Criteria at <br />https://disclosure.spglobal.com/ratings/en/regulatory/ratings-criteria for further <br />information. A description of each of S&P Global Ratings' rating categories is <br />contained in ,S&P Global Ratings Definitions" at <br />https://disclosure.spglobal.com/ratings/en/regulatory/article/-/view/sourceld/504352. <br />https://www.spglobal.com/ratings/en/regulatory/article/-/view/type/HTML/id/3470161 3/7 <br />