The Los Angeles Department of Water and Power is returning to the municipal bond market with a $1 billion offering, roughly three months after shelving a sale in the immediate wake of historic wildfires that began burning in Southern California on Jan 7.
The power system revenue bonds are set to price for retail investors on April 30, a day before institutional buyers. The department will use proceeds from the sale to ramp up its capital investment program and refinance some outstanding debt.
The issue is shaping up to be a major test of how muni investors view climate risk. The utility’s bonds used to trade better than AAA credits, though the wildfires raised the prospect it will be facing higher costs. The utility will likely need to increase infrastructure spending and it could owe billions in damages as the cause of the flames is still unknown. The department can’t rely on the safety net that investor-owned utilities have through California’s wildfire insurance fund, which would mean higher rates for customers and credit strains for bondholders.
Bloomberg CityLab
By Maxwell Adler
April 29, 2025