The Los Angeles Department of Water and Power (LADWP) issued $303.3 million in bonds to refund previously issued securities.
The bonds mature between 2024 and 2043, yielding between 3.21% and 4.19%. 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 the underlying fundamental strengths of the LADWP Power System that self-regulates its monopolistic provision of essential electricity to a sizeable and diverse customer base in the City of Los Angeles (Aa2 stable),” Moody’s analysts wrote.
The issuance comes as LADWP adjusts its energy mix to meet a goal to provide 100% renewable energy by 2035. So far, the utility has made moderate progress; last year, Los Angeles Mayor Eric Garcetti announced that renewables made up 60% of the utility’s energy supply.
In California, the need to transition to renewables has been underscored by a spate of extreme weather. Intensifying wildfires and storms have imposed significant costs on the state’s economy over the past several years, and millions of people live in high-risk areas.
Proceeds from the sale will refund bonds issued in 2012, 2014, and 2018.
LADWP is among the largest electric utilities in the United States, servicing about 4 million people across almost 500 square miles. The bonds are special obligations of LADWP, secured by net revenues from the power system.
TD Securities (USA) LLC served as lead underwriter on the issuance, purchasing the bonds for $325.5 million. The price reflected a premium of more than $22 million.