The Municipal Improvement Corporation of Los Angeles (MICLA) sold $176.5 million in bonds to retire previously issued securities.
The bonds mature between 2024 and 2043, yielding between 3.01% and 4.04%. They pay interest at 5%. The securities received a rating of Aa3 from Moody’s Investors Service and AA- from Fitch Ratings.
“The Aa3 lease revenue bond rating is one notch lower than the issuer rating reflecting the contingent nature of the debt coupled with the more essential leased assets,” Moody’s analysts wrote.
The bond proceeds will retire outstanding maturities of commercial paper previously issued by the corporation. It sold more than $250 million in commercial paper notes over the past two fiscal years.
MICLA is a public benefit corporation formed in 1984 with the purpose of supporting Los Angeles residents by financing the acquisition of city properties and capital equipment. It owns fire and police stations, sanitation yards, and other buildings and equipment in Los Angeles, which it leases to the city. Rent makes up the vast majority of MICLA revenue, which was about $55 million in both fiscal year 2022 and FY2021.
The bonds are limited obligations of the corporation, secured by lease payments from the city for six facilities and capital equipment for various city departments.
RBC Capital Markets LLC served as lead underwriter on the issuance, purchasing the bonds for more than $193 million. The price reflected a premium of $17 million. KNN Public Finance, LLC served as municipal advisor.