The city of Los Angeles issued almost $1.5 billion in tax and revenue anticipation notes to finance its general fund for the upcoming fiscal year.
The notes mature on June 27, 2024. They pay interest at 5% and yield 3.2%. The securities received a rating of MIG1 from Moody’s Investors Service and SP-1+ from S&P Global Ratings.
“The assignment of the MIG 1 rating is driven by Los Angeles County’s strong long-term credit quality, as reflected in its Aa1 issuer rating,” according to Moody’s.
The issuance comes almost two months after the passage of the city’s 2023-2024 budget, the first proposed by newly minted mayor Karen Bass. It calls for $13 billion in spending, including $1.3 billion earmarked to address the city’s homelessness crisis. The budget marked a 6.3% increase over last year.
Homelessness has been a hallmark of Bass’ agenda since the mayor took office in December of last year. About 75,000 people in Los Angeles County are homeless, more than in any other county in the United States. More than 45,000 of those people are in the city of Los Angeles. The number of homeless people in the county increased by about 10% last year, reflecting a similar trend as other major U.S. cities, according to the Los Angeles Homeless Services Authority.
Los Angeles County is the largest in the country by both population and assessed property value. The city projects an incoming cash flow of $11.34 billion for the upcoming fiscal year. The notes issued this week are general obligations of the city.
UBS Financial Services Inc served as lead underwriter on the issuance, purchasing the notes for $1.51 billion. The price reflected a premium of almost $25 million.