LADWP Receives High Ratings from Top Wall Street Ratings Agencies as Power Revenue Bonds are Issued
|LOS ANGELES — The recent sale of Los Angeles Department of Water and Power (LADWP) power system revenue bonds issued on May 4 had an overwhelming response with over $1.5 billion of orders made on the $275 million offering. This resulted in one of the lowest interest costs of a Power System debt issuance in LADWP history at a low-interest rate of 3.26%. Additionally, LADWP refinanced $80.6 million in outstanding power system bonds, saving an estimated $11 million over the next eight years.
The favorable sale followed Moody’s Investors Service and Fitch Ratings recent upgrade of the rating and outlook of LADWP’s power system bonds, respectively, and follows an upgrade on LADWP’s Water System bond ratings by Standard & Poor’s. Moody’s boost of long term power system bond series 2016A ratings from Aa3 to Aa2 translated directly into reduced borrowing costs for LADWP. Given the amounts of the debt financing anticipated for the Power System’s ambitious 5-year power capital program, it is estimated that the ratings upgrade alone will save LADWP ratepayers over $1 million per year for the next 35 years.
Fitch Ratings also revised the outlook for the power revenue bonds from “stable” to “positive.” The ratings agencies cited recently approved rates actions and LADWP’s expansive and diverse service territory, as well as its management’s strong financial policies and practices, as solid foundations for financial stability.
LADWP, the nation’s largest municipal utility, issues tax-exempt revenue bonds to finance capital improvements designed to upgrade facilities and improve service and reliability for customers. Proceeds from the power system revenue bonds sales will be used to finance a portion of the on-going power system capital improvement efforts, such as replacing power poles and transformers. It will also support the transforming of generation resources by increasing renewable energy, while divesting from coal generation to meet environmental and regulatory mandates.
LADWP’s power system includes over 6,800 miles of overhead distribution power lines, 3,597 miles of underground distribution cables and 321,516 power poles. The LADWP has achieved having over 20% of its power generation from renewable sources and is on the way to 33% of its power generation coming from renewable sources.
To learn more about the finances of the Los Angeles Department of Water and Power and its capital improvement projects, visit the web site at www.ladwp.com under the Investor Relations tab.