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LA Issues $276 Mln in Power System Bonds

By Munichain News Desk

The Los Angeles, California, Department of Water and Power sold $275.6 million in bonds to refund previously issued securities.

The bonds mature between 2036 and 2039, yielding between 2.6% and 2.9%. They pay interest at 5%. The securities received a rating of Aa2 from Moody’s Investors Service, AA- from S&P Global Ratings, and AA from Kroll Bond Rating Agency.

“The Aa2 rating reflects key underlying fundamental strengths including its self-regulation and monopolistic provision of essential electricity to a sizeable and diverse customer base,” Moody’s analysts wrote.

The department will use the issuance proceeds to refund bonds it sold in 2010. The department sold an additional $372.5 million in Series 2024 bonds earlier this month.

The LA Department of Water and Power provides electricity to almost 4 million people in southern California. The bonds are special obligations of the department, payable by power system revenue. 

Electricity sales generated $5 billion in revenue for the department last fiscal year, according to the official statement accompanying the sale of the bonds. That marked a 20% increase from 2019, when electricity sales yielded $4 billion in revenue, according to the bond documents.

BofA Securities, Inc served as lead underwriter on the issuance, purchasing the bonds for $327 million. The price reflected a premium of $52 million. Public Resources Advisory Group acted as financial advisor.

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