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California School District Sells $148 Mln in Bonds

By Munichain News Desk

A school district in the suburbs of San Jose, California, issued $148.3 million in bonds to refund previously issued securities.

The bonds, sold by the Santa Clara Unified School District, mature between 2025 and 2038, yielding between 2.2% and 2.81%. They received a rating of AAA from S&P Global Ratings and Aaa from Moody’s Investors Service, which assigned a stable outlook. 

“The rating reflects the largely property tax-funded Silicon Valley district’s extremely strong tax base,” S&P analysts wrote.

That tax base has risen significantly in recent years, while tech companies headquartered nearby have seen their valuations soar. Assessed property valuations in the school district have increased by 32% over the last five years, according to S&P, raising the district’s bondable revenue. 

The school district will use the issuance proceeds to refund bonds that it sold in 2015 to achieve debt service savings.

The Santa Clara Unified School District enrolls 13,948 students across the northern California cities of San Jose, Santa Clara, and Sunnyvale, according to the bond documents. The bonds are general obligations of the school district, payable by property taxes.

Morgan Stanley & Co LLC served as underwriter on the issuance, purchasing the bonds for $169.5 million. The price reflected a premium of more than $21 million.

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