The Los Angeles Community College District sold $300 million in bonds to expand and modernize its facilities.
The district sold the bonds in two series. The tax-exempt Series A-1 bonds, consisting of $225 million, mature between 2024 and 2027, yielding between 2.67% and 2.99%. They pay interest at 5%. The taxable Series A-2 bonds, consisting of $75 million, mature on August 1, 2024 and yield and pay interest at 5.5%. The securities received a rating of Aaa from Moody’s Investors Service and AA+ from S&P Global Ratings.
“The Aaa rating reflects the district’s massive and diverse tax base that will continue to benefit from solid growth, strong property wealth and slightly below-average resident income,” according to Moody’s.
The district is the largest community college district in the United States by number of enrolled students. It encompasses nine two-year colleges in Los Angeles County and provides low-cost education to almost 80,000 full time equivalent students, 80% of whom are from underserved populations.
In 2001, the district launched a bond-funded modernization program to revitalize its schools. Since then, it has mobilized almost $15 billion in funding to complete 776 projects, including new academic buildings, laboratories, libraries, sports complexes and other improvements. This week’s issuance, which is part of a $5.3 billion authorization approved by Los Angeles voters last year, is the latest in that program.
“Our goal is to provide students, faculty, and staff with facilities that support excellence in education and, in turn, prepares them to succeed in the 21st century economy and beyond,” the website for the district’s building program says.
The bonds are general obligations of the district, payable by property taxes.
Morgan Stanley & Co LLC served as lead underwriter on the issuance, purchasing the Series A-1 bonds for $237.7 million. The price reflected an original issue premium of $13 million. The underwriters purchased the Series A-2 bonds for close to par.