Riverside County, California, sold a $425 million tax and revenue anticipation note to finance current expenses and capital expenditures.
The note matures on June 30, 2025, and yields 3.25%. It pays interest at 5%.
The note received a rating of F1+ from Fitch Ratings and SP-1+ from S&P Global Ratings. Fitch also upgraded the country’s issuer default rating to AA from AA-.
The rating “reflects the county’s strong population growth and weak demographic strength including somewhat elevated unemployment relative to the national rate,” Fitch analysts wrote.
Population growth often translates to an increase in taxable economic activity. A higher tax base means more money to secure bond issuances, and thus more money to spend on projects like infrastructure investment.
Riverside County has seen moderate population growth in recent years even as California’s population has shrunk. Southwest of Los Angeles, it is now the fourth-most populous county in California and the tenth-most populous in the United States. Unemployment in the county is 4.8%, the same level as the state, but higher than the U.S. average of 3.6%.
The note is a general obligation of the country, payable by its unrestricted revenues.
J.P. Morgan Securities LLC served as lead underwriter on the issuance, purchasing the note for $432 million. The price reflected a premium of $7 million. Fieldman, Rolapp & Associates, Inc acted as municipal advisor.