The city of Los Angeles, California, issued $1.54 billion in tax and revenue anticipation notes to provide cash flow management for the upcoming fiscal year.
The notes mature on June 26, 2025, and yield 3.42%. They pay interest at 5%. The securities received a rating of MIG 1 from Moody’s Investors Service and SP-1+ from S&P Global Ratings.
The rating “is driven by the city’s strong long-term credit quality,” Moody’s analysts wrote. They added that the rating “incorporates the healthy projected liquidity position at the time of note maturity, predictable pledged receipts well timed for note repayment, the quality of cash flow management, and a solid schedule for setting aside receipts to be used for note repayment.”
The city will use the note proceeds to fund pensions for city police officers and firefighters and contributions to city employee retirement funds, among other expenses.
The note brings the debt issued by the city and county of Los Angeles in the past month to more than $2 billion. The city issued $150 million in taxable general obligations bonds around the same time that it issued the notes. In June, the county sold $700 million in its own tax and revenue anticipation notes.
The notes are general obligations of the city of Los Angeles, payable by its tax receipts, income, and other revenue.
Loop Capital Markets, LLC served as lead underwriter on the issuance, purchasing the notes for $1.57 billion. The price reflected a premium of $22.8 million. Montague DeRose and Associates, LLC acted as municipal advisor.