The Department of Water and Power of the City of Los Angeles, California, sold $447.4 million in bonds to refund previously issued securities.
The bonds mature between 2024 and 2044, yielding between 2.66% and 3.45%. They pay interest at 5%. The securities received a rating of AA+ from Kroll Bond Rating Agency, Aa2 from Moody’s Investors Service, and AA+ from S&P Global Ratings.
“The Aa2 rating reflects the department’s exceptionally large and stable customer base and local economy, providing a base of ratepayers that is among the largest in the nation,” Moody’s analysts wrote.
The department will use the issuance proceeds to achieve debt service savings by refunding bonds that it sold in 2009 and 2014.
The Los Angeles Department of Water and Power is the largest municipal utility in the United States. The bonds are special obligations of the department, payable by its water revenue. The LA water system recorded $1.66 billion in operating revenue last fiscal year, according to the official statement accompanying the sale of the bonds.
TD Securities (USA) LLC served as lead underwriter on the issuance, purchasing the bonds for $509.4 million. The price reflected a premium of more than $62 million. Public Resources Advisory Group, Inc acted as municipal advisor.