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California Authority Sells $361 Million in Bonds

By Munichain News Desk

The California State Public Works Board (SPWB) issued $361.4 million in bonds to fund the construction of jails, courthouses, and a fire station.

The board sold the bonds in two series. The tax-exempt 2023 Series D bonds, consisting of $306.2 million, mature between 2024 and 2048, yielding between 3.54% and 4.85%. The federally taxable 2023 Series E bonds, consisting of $55.1 million, mature between 2024 and 2035, yielding between 5.54% and 6.16%. The securities received a rating of AA- from Fitch Ratings, A+ from S&P Global Ratings, and Aa3 from Moody’s Investors Service, which assigned a negative outlook.

Moody’s analysts said the negative outlook was based on California’s “weakened and uncertain revenue environment that raises the possibility of extended pressure on the state’s budget.” The rating agency warned that SPWB’s rating could be lowered if California’s debt is downgraded.

California spending is threatening to exceed revenue next year, threatening some of the state’s public works projects. The state is currently facing a $14 billion budget shortfall; earlier this year, Governor Gavin Newsom presented a budget that forecasted a deficit of more than $30 billion.

The bond proceeds will finance various capital projects for departments who lease property from SPWB. These include two new jails, two new courthouses, and a forest fire station.

SPWB operates public buildings in California, leasing them to state authorities and agencies. The bonds are special obligations of the board, secured by rental payments from leases between state departments and SPWB.

Morgan Stanley & Co LLC won a competitive bid to purchase the bonds, buying them for more than $374 million. 

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