Riverside, California, issued $213.3 million in bonds to finance capital improvements to the city’s electric system and refund previously issued securities.
The bonds mature between 2024 and 2049, yielding between 2.1% and 3.54%. They pay interest at 5%. The securities received a rating of AA- from S&P Global Ratings and AA- from Fitch Ratings.
The rating reflected “improved financial performance in fiscal 2022 following multiyear financial margin tightening exacerbated by declining energy sales and operating expense increases,” Fitch analysts wrote.
A series of energy sales have increased Riverside’s revenue in recent years, according to Fitch. Riverside’s electric system generated $407 million in revenue in fiscal year 2022, up from $369 million in FY2019. The system generated $428 million in total revenue in FY2023.
The bond proceeds will fund a series of upgrades to Riverside’s electric system, including overhead, underground, and substation improvements. The proceeds will also refund bonds Riverside issued in 2008 and 2011.
Riverside is a city of more than 300,000 people about 60 miles east of Los Angeles. The bonds are special limited obligations of the city, payable by electric system revenue.
J.P. Morgan Securities LLC served as lead underwriter on the issuance, purchasing the bonds for $249 million. The price reflected a premium of $36 million. PFM Financial Advisors LLC acted as municipal advisor.