Featured Municipal Bond Issue, Week of October 29, 2018: City of Los Angeles, California Wastewater System Subordinate Revenue Bonds — $362 Million (Includes $220.5 Million Green Bonds)
For the second time this month, MuniNet features a bond issue from the City of Los Angeles, California. The City intends to issue by negotiated sale a total of $362,035,000 Wastewater System Subordinate Revenue Bonds in two parts. The Series 2018-A portion in the amount of $220,465,000 are to be used to finance the construction and improvement of the Wastewater System and pay all outstanding Wastewater Commercial Paper. They are deemed by the City as Green Bonds since the project being financed is intended to provide “environmental benefits” in line with the city’s sustainable city plan. The Series 2018-B issue, estimated to amount to $141,570,000, is to be used for the purposes of refunding a portion of the System’s outstanding variable rate refunding series and pay all or a portion of the swap termination payments. The bonds are being sold by negotiated syndicate led by Siebert Cisneros Shank & Co., LLC. The sale is expected to occur during the week of October 29th, subject, in part, to market conditions.
Both series of Bonds will be special, limited obligations of the City payable solely from specifically designated revenues, on a basis subordinate to the Senior Lien Bonds, and from amounts on deposit in the 2018 Subordinate Debt Service Fund. Any pledge, assignment or lien related to the Senior Bonds take priority over the Subordinate Bonds. They are not payable from the city’s general fund, nor are they a general obligation of the city, and neither the full faith and credit or taxing power of the city is pledged.
The city’s offering materials project that the System is likely to have an estimated total 2018-19 debt service coverage of 1.78x relative to both the senior and subordinate debt.
The City owns and operates the Los Angeles wastewater system, which serves a 600 square mile with a population of over four million (approximately half of the population of Los Angeles County. The ten largest customers of the Wastewater System, represent 5.8% of all operating receipts.
Potential investors should review the preliminary official statement offering document in its entirety for complete details and special provisions related to the Security or the 2018A Bonds and the Proposed Amendements to the Master Indenture. Visitors to Munios must register first on MUNIOS.COM website before clicking on the specific reference to the Official Statement. An investor road show slide presentation accompanies the prospectus on the munios.com website. Additional information can also be found on the City’s Debt Management/Investor Relations Website: http://cao.lacity.org/debt/
Interest on the Series 2018A bonds are in the opinion of Bond Counsel tax-exempt for federal income tax purposes and is exempt from State of California personal income taxes.
Details on the purposes, tax-status, security, risks as well as other matters pertaining to these OSF bonds can be found in the preliminary official statement after registering on the munios website and searching for the the City of Los Angeles Wastewater System Subordinate Revenue Bonds.
These facts and numbers are for informational purposes, and should not be considered an official disclosure for potential investors. Investors should consult the official statement. None of the information provided should be construed as a recommendation by MuniNet Guide, MuniNet LLC, Merritt Research Services LLC, or any of their employees. Information and analysis is for informational purposes only.