The County of Los Angeles, California, issued $700 million in tax and revenue anticipation notes to finance its expenses.
The notes mature in June 2025 and are priced to yield 3.25% with a 5% coupon. They received a rating of F1+ from Fitch Ratings, MIG 1 from Moody’s Investors Service, and SP-1+ from S&P Global Ratings. Fitch also upgraded Los Angeles County’s issuer default rating to AAA from AA+.
The upgrade recognizes “the county’s role as the center of an important and growing metropolitan statistical area (MSA) with a vital role in the national economy,” Fitch analysts wrote. The Los Angeles MSA generates 5.4% of U.S. gross domestic product (GDP), according to Fitch.
The county will use the issuance proceeds to fund its current expenses and capital expenditures. Los Angeles has sold such notes every year since 1977 to finance cash flow shortages.
The notes are general obligations of Los Angeles County, payable by its unrestricted revenue. The country predicts that revenue available for debt service will exceed $13 billion this fiscal year, according to the official statement accompanying the sale of the notes.
Morgan Stanley & Co LLC served as lead underwriter on the issuance, purchasing the bonds for $711.5 million. The price reflected a premium of more than $11 million. Omnicap Group LLC acted as municipal advisor.