Altadena public library bonds traded lower and L.A. power and water bonds suffered a credit ratings downgrade, signs the municipal market is growing concerned about the Los Angeles wildfires.

Los Angeles area governments will be able to rely on federal and state aid plus a rich and diverse tax base to help fund their recovery. The Altadena library, which is still standing, and L.A.’s water and power debt remain well within investment-grade status.

But the fires could still disrupt the taxes and fees flowing to many borrowers in the $4 trillion market for state and local governments.

The library bonds traded at 95 cents on the dollar Tuesday, down from 100 cents on the dollar in December. The bonds, issued three years ago to finance a renovation still underway, are largely backed with special taxes collected in Altadena, a mostly residential eight-square mile area of unincorporated Los Angeles County hit hard by the Eaton fire.

Also Tuesday, S&P Global Ratings lowered its grades on the city of Los Angeles’s water and power bonds. Those securities are backed by fees paid by L.A. rate-payers, some of whose homes burned down in the Palisades fire. While only a small share of ratepayers have so far been affected, analysts said the increasing likelihood of fire disruption in L.A. and other urban areas makes such bonds a shakier bet going forward.

The Wall Street Journal

by Heather Gillers

• Blazes are a ‘tipping point’ for munis, researcher says
• Utility rates likely to rise because of rebuilding costs

There’s a truism in municipal debt: Bonds rarely move on natural disasters. That long-tested concept had held up until fires destroyed thousands of properties in Los Angeles last week.

The Los Angeles Department of Water and Power — the biggest American municipal utility — has seen its bonds drop and credit rating downgraded as the blazes continue to burn. A planned debt sale this week is in limbo. While there hasn’t been anything to establish a connection between LADWP’s power lines and the Palisades Fire in its territory, the investor concern is clear.

The disaster has exposed LADWP’s fire preparedness as vulnerable and perhaps inadequate. It didn’t turn off electricity in the Pacific Palisades before the massive blaze erupted Jan. 7 — the type of move power giants PG&E Corp. and Edison International frequently make when extreme winds are forecast. The utility has already been sued by homeowners faulting it for not supplying enough water to fight the flames.

Continue reading.

Bloomberg Markets

By Maxwell Adler, Mark Chediak, and Amanda Albright

January 16, 2025

S&P Global Ratings on Tuesday lowered the rating on municipal bonds sold by Los Angeles Department of Water and Power, downgrading the utility’s power system bonds by two notches to A from AA-.

The ratings company said that the rating on the power system bonds “face further and significant downward pressure” after the devastating wildfires in Los Angeles. S&P also lowered its rating on the utility’s water system revenue bonds by two notches to AA- from AA+. Prices on LADWP power bonds have already dropped in recent days as investors assess the damage posed by the fires.

“Although the utility’s infrastructure has so far not been implicated as the cause of the ongoing wildfires, the increasing frequency and severity of highly destructive wildfires within LADWP’s service territory and recent spread into more urban areas highlights the utility’s potential vulnerability to financial liability claims that could eclipse its liquidity and insurance coverage,” said S&P Global Ratings credit analyst Paul Dyson.

Continue reading.

Bloomberg Markets

By Amanda Albright

January 14, 2025

• Failure to fix reservoir blamed for inadequate fire response
• Blaze bigger than Manhattan has razed over 5,000 structures

The city of Los Angeles’ electric and water utility was hit with a lawsuit faulting it for not supplying enough water to fight the biggest fire still raging in the second-largest US metropolis.

Property owners in the city’s tony Pacific Palisades neighborhood sued the Los Angeles Department of Water and Power, the largest municipal utility in the US. The complaint appeared late Monday on the Los Angeles Superior Court’s website, but hasn’t yet been fully processed by the court.

The plaintiffs claim that a reservoir that had been drained and not repaired, coupled with inadequate water pressure in fire hydrants, undercut efforts by firefighters and ultimately allowed the wind-whipped fire to spread out of control. The cause of the fire remains under investigation.

Continue reading.

Bloomberg Markets

By Jef Feeley, Mark Chediak, and Robert Burnson

January 13, 2025

• Pricing of borrowing has been moved to ‘day to day’ status
• Deal had been expected to sell on Wednesday: pricing wire

A bond offering by the Los Angeles Department of Water and Power that was expected to price this week moved to “day to day status” on Monday amid the wildfires in Southern California, according to people familiar with the matter, who asked not to be identified discussing the deal.

Bank of America Corp., the lead underwriter of the transaction, sent a notice that the transaction has been moved to day-to-day status, according to a pricing wire viewed by Bloomberg. That designation typically signals a deal will price when conditions warrant. The utility was set to offer water system revenue bonds for capital projects, according to preliminary bond documents dated Jan. 7. It was initially set to price on Wednesday, according to a separate pricing wire.

Power system bonds sold by the utility have dropped in the past week after the devastating wildfires in Los Angeles. The department is the largest municipal utility in the US, responsible for providing electric and water services to about 3.8 million residents. As of Dec. 31, the system had about $6.6 billion of water-revenue debt outstanding, bond documents say.

Sheryl Lee, a spokesperson for Bank of America, declined to comment. A spokesperson for LADWP didn’t immediately provide a response to requests for comment.

Bloomberg Markets

By Amanda Albright

January 13, 2025

Fitch Ratings-San Francisco/New York-17 January 2025: Facilities supported by state appropriation-backed bonds remain unaffected by the recent Los Angeles wildfires, according to Fitch Ratings. The California State Public Works Board (SPWB) and the State Treasurer’s Office have reviewed the leased facilities in the Los Angeles area for the SPWB bonds and have indicated that none have been damaged by the LA fires.

The SPWB issues appropriation-backed bonds for facilities throughout the state. Each state agency’s obligation to pay rent under the various facilities’ leases between state agencies and the SPWB is subject to the ongoing use and occupancy of the facility leased under the facility leases. Rent can be abated when there is substantial interference with the use and occupancy of the facility.

Fitch generally rates appropriation-backed bonds one notch below the obligor’s Issuer Default Rating (IDR), reflecting the slightly higher degree of optionality associated with lease/appropriation payments compared to the IDR. Fitch believes the incentive and propensity to repay lease/appropriation debt is closely linked to an obligor’s incentive and propensity to repay all debt. This reasoning applies to abatement leases and Fitch does not apply additional notching from the IDR when abatement is present. Fitch assumes that the issuer will repay such debt even if it technically has the option not to do so.

This was the case in 2023 when the California Department of Food and Agriculture (CDFA) lost use and occupancy of a bond-financed facility following flooding in Tulare. The obligation of the CDFA to pay rent under the facility lease between the CDFA and SPWB was abated as there was substantial interference with the use and occupancy of the facility. At that time, it was determined that the abated portion was modest relative to the overall lease financing and the SPWB used legally available funds for payment of a portion of one debt service payment. Ultimately, the bonds were defeased through a subsequent refunding issuance and such CDFA facility is no longer subject to a facility lease for any outstanding SPWB bonds.

Here, we address questions we have received from investors about how the blazes might affect municipal credits in the state.

In Brief

• We expect that very few municipal credits in Los Angeles and Ventura Counties will face any long-term negative credit impact from the January 2025 wildfires.
• School districts affected by wildfires have received financial support from Sacramento in the past, while revenue-bond issuers should face limited to no long-term credit impact from the wildfires.
• In assessing the financing of recovery efforts, we would note that in previous disasters, the rebuilding process has historically been supported by a range of solutions including significant federal aid, support from state governments, and funding mechanisms such as increased taxes, higher utility rates, and issuance of additional municipal debt.
• While the potential liabilities, if any, faced by the electric-utility arm of the Los Angeles Department of Water and Power (LADWP) may not be determined for some time, we believe that LADWP has strong cost recovery mechanisms available, with extraordinary support from governmental entities also being possible.

The series of wildfires that broke out in Los Angeles in early January has caused tremendous damage, and our thoughts are with all those affected, their friends and families, and the first responders working to contain the blazes. At times like this, it is difficult to see past the immediate suffering, but investors in California municipal bonds should be reassured that we expect very few municipal credits in Los Angeles and Ventura Counties to face any long-term negative credit impact from the disaster. In addition, investors may take some comfort in the fact that municipal bonds directly support fire prevention and containment efforts—financing the construction of fire stations, the acquisition of fire trucks and emergency service vehicles, and the maintenance of water infrastructure that makes fighting fires possible.

The road to recovery after disasters is often a long and difficult one, but time after time, we have seen impacted communities show resilience following disasters, whether they are hurricanes, ice storms, or wildfires. The rebuilding process has historically been supported by significant federal aid, extraordinary state legislation, and state support, in addition to more traditional routes for raising funds such as through increased taxes, higher utility rates, and issuance of additional municipal debt. Considering all the financial levers available to municipal entities, we view the downside more as the time it will take to determine the solution rather than the actual risk of nonpayment of financial obligations.

Government & School District Impact
As we discussed in a previous article, California’s general obligation credit standing remains strong. While concerns about the liabilities created for the state’s insurer of last resort, the FAIR Plan, have been well publicized, less frequently noted is that the state is not responsible for making up any shortfalls that may materialize from claims related to wildfire damage—the burden will be spread across ratepayers all over the state in the form of insurance surcharges and thus will not directly affect the state’s finances.

While the large size and revenue diversity of city and county credits help insulate them from localized emergencies, the state’s school districts, with their reliance on enrollment-linked state revenues and often much smaller size, face a different set of challenges. Fortunately, the state has historically been very quick to step in when disaster strikes.

Case in point: Following the 2018 Camp Fire, the Paradise Unified School District lost nearly half of its enrollment in one year as families were forced to relocate while rebuilding efforts commenced. The state immediately tasked the Fiscal Crisis & Management Assistance Team with identifying a solution, and quickly passed emergency “hold harmless” provisions that granted the district additional funding that was gradually phased out through fiscal 2023. Because of the state’s prompt and effective action, the district’s credit rating remained investment grade, and no negative actions were taken by the rating agencies while the hold harmless provisions phased out.

Two areas that have been significantly affected by the current wildfires are Pacific Palisades and Altadena. Because neither Pacific Palisades nor Altadena are independent municipalities themselves, there are no outstanding general obligation bonds that are backed solely by these areas.

Sector Impact
Beyond tax-backed debt, the municipal bond market also consists of other sectors such as healthcare, higher education, transportation, and utilities. In our analysis, almost all such credits operating in Los Angeles County and Ventura County should face limited to no long-term credit impact from the wildfires due to strong existing creditworthiness or sufficient physical distance from the wildfires, although a few names need to be monitored given proximity to the blazes. There is a very limited number of names and sectors that we would expect to see negative credit impact from the wildfires.

One sector that could be negatively affected would be real estate development deals in the direct path of the wildfires. Known in our market colloquially as “dirt” deals, such issuances are typically secured by special tax assessments on property or revenues derived from incremental assessed value growth within the area where the development took place. Issuances backed by very small acreage face stress if hit by a force majeure event. In our review of the broader California dirt market, we have pinpointed very limited outstanding dirt debt which may see a negative credit impact from the recent fires.

Focus on LADWP
The highest-profile municipal issuer in the headlines is the Los Angeles Department of Water and Power (“LADWP”). The electric arm of LADWP serves much of Los Angeles County including Pacific Palisades. In California, electric utilities are liable for wildfire damage caused by their equipment. It has not been formally determined if LADWP equipment in Pacific Palisades sparked the Palisades Fire, and a formal determination is likely months away, but at least two media outlets have reported that no LADWP equipment was in the immediate vicinity of the ignition point, and that the fire is initially suspected to be caused by humans.

In the meantime, we think it is worth reviewing LADWP’s credit strengths. LADWP is the largest municipal utility in the country and is currently highly rated (following S&P’s downgrade of the debt to ‘A‘ on January 14, LADWP is rated either ‘AA’ or ‘A’ by all three major rating agencies). Unlike corporate utilities, LADWP, as a municipal utility, has independent rate-setting authority, which includes the ability to raise rates or issue debt as it sees fit, without any third-party oversight. Significant wildfire-related liabilities, if any, could be addressed by issuing debt and raising rates, and/or via extraordinary support from the city, county, state, or federal governments. Higher rates would be suboptimal for LADWP ratepayers. However, residential rates are currently 21 cents per kilowatt-hour (kWh), significantly lower than the 32 cents per kWh rate paid by residential customers of Southern California Edison (SCE), the largest electric utility adjacent to LADWP. Therefore, LADWP retains very significant ability to raise rates if needed. We would also note that, per a recent Moody’s default study,1 there have historically not been any municipal electric utility defaults due to weather incidents like hurricanes, wildfires, and other events.

We expect continued headline risk, but we also note that (1) cost recovery mechanisms for LADWP are inherently strong; (2) the cause of the Palisades Fire remains undetermined with initial speculation being that the fires were not sparked by LADWP equipment; and (3) even if LADWP is found liable for significant damages, there is a playbook in place to address such costs in an orderly manner, with extraordinary support from governmental entities also being possible. Nevertheless, it is important to continue to monitor the still-ongoing fire developments and the size of any potential liabilities, which have continued to grow.

The previously mentioned SCE has also been in the headlines, as the large Eaton fire was sparked within its service area. SCE, which has a very limited amount of municipal debt outstanding, is a regulated investor-owned utility that is subject to a different cost recovery process. We would note, though, that SCE has access to a significant, newly formed, $20 billion-plus wildfire fund available for the three California based investor-owned utilities. Further, the limited number of outstanding SCE municipal bonds are senior secured, meaning that in more stressed scenarios they would likely be senior to any potential unsecured wildfire liabilities.

Looking Ahead
After the fires are contained, public attention will turn to how communities will be rebuilt, how such events can be prevented in the future, and whether there will be an entity or entities that will be deemed financially responsible. We view rebuilding as inevitable given the attractiveness of the affected real estate locations, but questions will remain about the longer-term impacts on demographics and the insurance market. In terms of future prevention, storm hardening and wildfire mitigation protocols will be top of mind as the state finalizes its latest budget in the coming months.

Finally, we reiterate that we expect very low probability for any municipal bond payments to be disrupted, and that almost all municipal credits in California should see little to no credit impact from the recent wildfires. Even those that could see a potential credit impact, like LADWP, have very strong credit fundamentals and a playbook if needed to address very significant costs. We do expect headline risk to remain though, for many months, but not all unfavorable headlines will necessarily mean a negative credit impact.

LORD ABBETT

By Gary M. Huang, Roman Schuster

January 14, 2025

The State of Washington’s ‘AA+’ Long-Term Issuer Default Rating (IDR) and GO bond ratings reflect its broad and growing economy, with solid long-term revenue growth prospects, and the state’s demonstrated commitment to maintaining fiscal balance. The ratings also reflect long-term liabilities that place a low burden on the economic resource base. Revenue performance over time has exceeded U.S. GDP growth. Fitch Ratings expects this to continue to support strong revenue growth prospects. Washington possesses ample expenditure flexibility, with various statutory commitments including broad responsibility for education and infrastructure spending offset by low carrying costs. Washington also benefits from the broad expense-cutting authority common to most U.S. states. The combined burden of debt and net pension liabilities is low as a percentage of personal income but above the median for U.S. states as calculated by Fitch. Washington maintains very strong gap-closing capacity and budgetary flexibility with solid reserves.

Access Report

Thu 16 Jan, 2025

• The city’s Department of Water and Power is largest in the US
• JPMorgan analysts said the utility faces downgrade risk

Power revenue bonds sold by Los Angeles’s municipal utility dropped on Friday amid the devastating wildfires in Southern California.

Prices on municipal debt issued by the Los Angeles Department of Water and Power have declined this week. The average spread on debt due in 2045 widened to 112 basis points on Friday, up from as little as 95 basis points in December.

The scale of the destruction in America’s second-largest city is becoming clearer. At least 10,000 structures, including homes and businesses, have likely been damaged or destroyed as the blazes have burned about 30,000 acres, fire officials said.

The Los Angeles Department of Water and Power is the largest municipal water and power utility in the US, with 1.4 million electric customers. JPMorgan Chase & Co. strategists said the utility and other issuers “face headline and downgrade risk.”

Analysts at S&P Global Ratings said in a report Thursday that the fires “might pose significant financial and operational risks for rated entities, especially if not-for-profit electric utilities’ infrastructure triggered the fires.”

Still, Bank of America Corp. strategists said in a Friday report that Los Angeles’s overall credit profile will remain resilient given that it’s the second-largest city in the US. Utilities can also adjust rates to support operations when necessary, they said.

Bloomberg Markets

By Amanda Albright

January 10, 2025

NEW YORK–(BUSINESS WIRE)–With wildfires still burning in the Los Angeles area, KBRA is tracking real property leased assets of the City associated with various series of KBRA-rated lease revenue bonds issued by the Municipal Improvement Corporation of Los Angeles (“MICLA”).

Under the respective Lease Agreements, the City of Los Angeles (“the City”) agrees to pay MICLA, as rent, basic lease payments from the City’s General Fund. The City also agrees to pay “additional payments” which include insurance premiums on insurance required under each Lease Agreement.

Lease payments are subject to abatement if there is substantial interference with the use and possession of the real property because of loss, damage or destruction. However, lease payments are not subject to abatement to the extent that the proceeds of rental interruption insurance relating to the series of lease revenue bonds are available to pay lease payments which would otherwise be abated.

Per the Lease Agreements, during the term of the Lease Agreements, the City must maintain rental interruption or use and occupancy insurance to cover the total or partial loss of the use of any part of a MICLA property caused by any covered hazard for a period of 24 months. The City is not permitted to self-insure rental interruption insurance through its risk retention program. The Trustee is the beneficiary, and any amounts received shall be credited towards the relevant lease payments in the order in which they become due.

The City has also covenanted in the Lease Agreements to maintain insurance against certain risks, and the City’s annual budget includes funds for commercial insurance against loss or damage to the MICLA properties by fire and lightning. Extended coverage is also required for loss or damage by explosion, windstorm, smoke and certain other hazards.

Given the structural protections of the MICLA Lease Revenue Bonds, KBRA does not currently see any near-term credit impact on the KBRA-rated MICLA Lease Revenue Bonds. We will continue to monitor the status of the fires and their impact, if any, on the underlying properties.

January 10, 2025

The Airport Commission of the City of San Francisco will issue $996 million in municipal bonds to help fund its capital improvement plan.

The commission will sell approximately $243 million in Second Series 2025 A Revenue Bonds with maturities ranging from 2029 through 2036 and $627 million in term bonds maturing in 2055. The commission will also offer $108.4 million in Second Series 2025 B Revenue Bonds with maturities ranging from 2037 to 2053. Additionally, Second Series 2025 C Revenue Bonds in the amount of $17.1 million with a maturity date of November 1, 2025 will also be offered.

The Series A issue are AMT bonds, while the Series B is non-AMT and the Series C are federally taxable.

The pricing date on the offering is scheduled for Jan. 14 and the closing date is Feb. 6, according the roadshow document accompanying the preliminary official statement posted Thursday on MuniOS.

The bonds will be secured with a pledge of, lien on and security interest in the net revenues of the San Francisco International Airport.

Proceeds will be used to help fund the modernization of Terminal 3 West and the renovation of Terminal 1 Center. Proceeds will also be used for cargo and hangar improvements, runway upgrades, wastewater system improvements and preliminary work for shoreline protection projects. Funds will also be used to repay certain commercial paper notes and pay the costs of issuance, among other things according to the document on MuniOS.

For calendar year 2023, San Francisco International Airport was ranked as the 12th most active airport in the U.S. in terms of total passengers. The airport serves the second most populous area in California and the 5th most populous area in the U.S. The San Francisco area economy was the 11th largest in the world in 2022 and accounted for 36% of California GDP and 5% of U.S. GDP, according to a roadshow document on MuniOS.

S&P Global Ratings, Moody’s Ratings and Fitch Ratings have assigned AA-, A1 and A+ ratings to the bonds, respectively.

Samuel A. Ramirez & Co. is a lead underwriter on the offering.

Provided by Dow Jones Jan 9, 2025 12:17pm

By Patrick Sheridan

Write to Patrick Sheridan at [email protected]

(END) Dow Jones Newswires

January 09, 2025 15:17 ET (20:17 GMT)

Copyright (c) 2025 Dow Jones & Company, Inc.

At the end of 2019, the California Public Banking Act (AB 857) opened the doors for local governments to establish public banks. Just months later, the pandemic brought the world to a standstill, slowing progress. Yet, in the years since, this once-radical idea has quietly gained traction, reshaping the conversation about who controls financial power. In today’s unpredictable political and economic climate, local control isn’t just practical—it’s essential for advancing the public good.

Building a movement of this scale takes time. Progress has been slow, as institutional change often is. However, the ultimate impact could be profound. Public banks offer the promise of shifting economic power back to local hands, reducing reliance on federal and for-profit backing. This is no minor reform. It’s about transforming how public funds work to serve our collective benefit, not individual gain.

By empowering cities to establish community-owned, community-grown banks that focus on local needs above corporate profits, public banks offer a pathway to cut municipal costs, expand credit access, and drive sustainable growth—all while challenging Wall Street’s control of public dollars.

Continue reading.

nonprofitquarterly.org

by Trinity Tran

January 8, 2025

The devastating wildfires in Los Angeles are unlikely to have an impact on the bonds of local governments as US officials promise financial support from the Federal Emergency Management Agency, according to a report from FHN Financial.

“While the personal losses and community impacts are unimaginable, so far we expect municipal bondholders will be spared from the same magnitude of damages,” FHN’s Abigail Urtz said in a report.

The influx of aid and insurance payments has historically prevented natural disasters from driving local governments to default on their debt even in cases where the damage has been significant. That appears to be likely again, with the Biden administration issuing a disaster declaration that will allow for FEMA funding to be disbursed.

Continue reading.

Bloomberg Markets

By Amanda Albright and Maxwell Adler

January 9, 2025

• Bond sale will finance capital projects and debt repayment
• Fitch affirmed an A+ rating on outstanding SFO airport debt

The San Francisco International Airport is planning to tap the muni bond market with a $1 billion deal, becoming the latest among its peers to seek new capital.

The Bay Area airport will use proceeds of the debt sale to fund $565 million in capital improvement projects, repay outstanding obligations, and fund reserve requirements, according to a report from Fitch Ratings published this week.

Airports had been major debt issuers in 2024, borrowing more than $20 billion from muni investors last year, according to data compiled by Bloomberg. The deluge is expected to continue with facilities in Ohio and Texas already floating upcoming deals.

In San Francisco, air travel has recovered slower than its cohorts across the nation, though its performance is consistent with California peers, according to Fitch. “A full recovery is expected over the next few years as domestic departures ramp back up,” the analysts at Fitch led by Jim Code said.

The company assigned an A+ rating to the new sale and affirmed that grade on about $8.9 billion of the Bay Area airport’s revenue bonds. It provided a stable rating outlook for all of its debt, citing its “strong operational and financial performance.”

Moody’s Ratings upgraded the airport’s outlook to positive on Monday, signaling it may boost its credit rating. Moody’s rates the airport’s debt as A1, according to a report.

The raised outlook “recognizes that SFO’s enplanement recovery is poised to advance with continued strength in the local economy driven by investments in the areas AI technology companies,” the analysts at Moody’s said in the report. “The positive outlook also reflects that SFO’s service offering is tilted toward premium travelers that we expect to drive growth in the high-end segment this year, despite slow overall growth caused by weakness in low-cost travel.”

The airport’s capital improvement plan totals about $11 billion through 2033 with a majority of it to be financed through bonds, according to Fitch. The airport has a bevy of projects on its agenda, including fortifying its shoreline to address flooding risks and upgrading terminals.

A representative from the airport didn’t reply to phone and email messages seeking comment.

Bloomberg Markets

By Aashna Shah

January 7, 2025

The revision of the Rating Outlook to Negative reflects San Francisco’s persistently large budgetary gaps, which the city is closing primarily through the use of various non-recurring resources, including pandemic aid, fund balance, and other one-time sources. This is reflected in a -1 notch additional analytical factor (AAF), which reduces the headroom at the current ‘AAA’ rating. The stability of the ‘AAA’ rating is predicated on the city making demonstrable progress in closing the budget gap.

Access Report

Thu 09 Jan, 2025

The ‘AAA’ rating reflects the ability of Iowa Finance Authority’s (IFA) financial structures to absorb hypothetical pool defaults in excess of Fitch Ratings’ ‘AAA’ stress scenario without causing interruption in bond payments. Aggregate pool credit risk is measured using Fitch’s Portfolio Stress Model (PSM), and the strength of the program’s financial structure is measured using Fitch’s Cash Flow Model.

Access Report

Wed 08 Jan, 2025

Fitch Ratings-New York/Chicago-09 January 2025: Manhattan’s Central Business District Tolling Program (CBDTP; congestion pricing) will provide important funding for the Metropolitan Transit Authority’s (MTA) capital budget, Fitch Ratings says. However, the program will likely reduce connecting bridge and tunnel toll revenues despite the recent increase in tolls for crossings between New York and New Jersey.

Negative ratings actions are unlikely for the Triborough Bridge and Tunnel Authority (TBTA) and Port Authority of New York and New Jersey (PANYNJ), as varied revenue streams support their financial profiles. Both TBTA and PANYNJ have substantial financial cushions to absorb traffic declines and maintain their current ratings.

A federal judge recently ruled against New Jersey in a lawsuit brought by the state, which sought to halt congestion pricing. However, the ruling required the Federal Highway Administration (FHA) to provide additional information on the environmental impact on certain communities by Jan. 17.

Continue reading.

The ‘AA’ rating reflects Children’s Health Care’s (d/b/a Children’s Minnesota, or Children’s Hospitals and Clinics of Minnesota) strong balance sheet and robust liquidity. The rating also reflects Fitch Ratings’ expectation of a marginal operating improvement over the next two to three years as Children’s Minnesota starts an electronic health record (EHR) conversion project while focusing on operating efficiencies and key service line growth. Fitch expects operating EBITDA margins to reach about 7% by fiscal 2027, following compressed margins in fiscal 2023, with operating and EBITDA margin of 2.8%, and an expected operating EBITTDA margin of about 4% in fiscal 2024.

Access Report

Fri 10 Jan, 2025

S&P Global Ratings assesses Connecticut Housing Finance Agency’s Sustainability Framework as Light green and aligned with: Social Bond Principles, ICMA, 2023; Green Bond Principles, ICMA, 2021 (with June 2022 Appendix 1); and Sustainability Bond Guidelines ICMA, 2021. The state of Connecticut created CHFA, a quasi-public organization, in 1969 to alleviate the shortage of housing for low- to moderate-income families and individuals in the state.

Download

The Maryland Health and Higher Educational Facilities Authority plans to sell $301 million of municipal bonds for the University of Maryland Medical System.

The sale will include $227.9 million of Series 2025A bonds, encompassing serial bonds due from 2025 through 2042, and a $143 million term bond due in 2052, according to an offering statement posted Wednesday on MuniOS. The authority will sell $73 million of Series 2025B bonds maturing in 2045.

Delivery is expected on or about Feb. 12.

The authority also expects to sell $150 million of Series 2025C bonds in February.

The bonds are special obligations of the authority payable solely from payments by University of Maryland Medical System and certain affiliates to the authority or its trustee.

Money from sale will be used to help pay for construction of the Shore Regional Medical Center in Easton, the Center for Advanced Medicine project in Baltimore and refund other securities, according to the preliminary official statement. The medical system has more than 28,000 employees operating in over 150 locations, including 10 acute care hospitals and five freestanding medical facilities.

Bond counsel believes interest isn’t an item of preference for purposes of the alternative minimum tax for individuals.

The bonds have ratings of A2 from Moody’s Ratings rated the bonds A2, and S&P Global Ratings has them rated at A.

Lead underwriters are Morgan Stanley and RBC Capital Markets.

Provided by Dow Jones Jan 9, 2025 3:49pm

By Josh Beckerman

Write to Josh Beckerman at [email protected]

(END) Dow Jones Newswires

January 09, 2025 18:49 ET (23:49 GMT)

Copyright (c) 2025 Dow Jones & Company, Inc.

The Nebraska State Highway Commission recently authorized the Nebraska Department of Transportation to issue bonds to finance the completion of the US-275 expressway corridor; the first time the state has issued bonds to finance a state highway project.

The agency said this corridor project is vital to northeast Nebraska; vital to improving safety, supporting regional industries like agriculture and manufacturing, and enhancing access to markets and national freight networks.

This project underscores the state’s commitment to “advancing infrastructure” in order to improve quality of life and drive economic competitiveness, noted Governor Jim Pillen (R) in a statement – and bonding helps condense construction schedules that could take longer using traditional pay-as-you-go strategies.

“The completion of the Scribner – West Point corridor along the US-275 was a win for Nebraska, but there’s more work ahead,” the governor added. “Local communities have long supported this expressway, understanding the safety improvements and economic benefits it brings. I have directed Nebraska DOT to condense the timeline to complete the corridor.”

“With major employers and heavy truck traffic, completing the US-275 corridor is essential to supporting industries like steelmakers, manufacturers and farmers,” explained Highway Commissioner David Copple. “This vital infrastructure will drive economic growth and strengthen connections to healthcare, education and major markets.”

“[We are] using a fiscally conservative method to secure resources, safeguarding the schedule of the US-275 corridor,” noted Vicki Kramer, Nebraska DOT director.

“Innovative finance, bonding in this scenario, is a tool that can be leveraged to expediate project schedules, delivering needed safety and capacity improvements to communities,” she explained. “While this bond issuance will finance a portion of the corridor, it’s important to state [that] bonding is not a revenue source but rather a financing tool.”

American Association of State Highway and Transportation Officials

January 3, 2025

• Comment on U.S. First Circuit Court of Appeals’ Denial of FOMB’s Unprecedented Third Attempt to Invalidate Bondholder Lien on Past, Present and Future Net Revenues
• Despite Ongoing Blackouts and Repeated Litigation Losses, Oversight Board Turns a Blind Eye to the Interests of Puerto Rico
• Oversight Board’s Actions Signal Ill-Fated Plan to Extend PREPA’s Bankruptcy by Continuing Costly Litigation

NEW YORK–(BUSINESS WIRE)–January 03, 2025 — Bondholders of the Puerto Rico Electric Power Authority (“PREPA”), including GoldenTree Asset Management, LP, Assured Guaranty Inc., and National Public Finance Guarantee Corporation (collectively, the “PREPA Bondholders”), today issued the following statement:

“On December 31, the U.S. Court of Appeals for the First Circuit (the “Court”) denied an unprecedented additional round of motions for rehearing filed by the Financial Oversight and Management Board (the “Board”) and the Official Committee representing PREPA’s junior unsecured creditors seeking to wrongly strip fundamental bondholder rights. This is the third time in the last six months that the bondholders have won, and the Board has lost, in the Court of Appeals, which has now repeatedly confirmed that PREPA’s over $8.2 billion face amount of revenue bonds (which, with interest accrued prior to and during the now-seven-year span of the case, could result in a claim of over $11 billion) are properly secured by a perfected, enforceable lien on PREPA’s past, present and future net revenues.

Tone deaf to the Court’s repeated rejection of its arguments, the Board announced its intention to resume its already-failed strategy to impose a nonconsensual plan of adjustment, rather than working with its secured and properly perfected bondholders on a consensual exit from bankruptcy that recognizes the bondholders’ legal rights and funds PREPA’s immediate financing needs. After reneging on three prior settlements, the Board’s strategy ensures that PREPA will remain in bankruptcy for the foreseeable future and that measures to improve the reliability of PREPA’s electric system will be delayed indefinitely against the best interests of Puerto Rico. As demonstrated by the end-of-year island-wide power outage, the people of Puerto Rico will continue to suffer while the Board’s advisors add to all-time record high fees for a municipal restructuring, currently in excess of $1.5 billion.

The bondholders believe they are legally entitled to post-petition interest on their claim, which would increase it to over $11 billion, that they have billions of administrative expense claims arising from PREPA’s consumption of their collateral during the case, that their rights are senior to the underfunded claims of PREPA’s pension, and that the Commonwealth has liability for any bondholder losses. The bondholders intend to vigorously litigate these and other issues absent a global settlement. In that regard, the mediation team appointed in PREPA’s bankruptcy case has publicly expressed its skepticism regarding the ability to forge a settlement absent further litigation, which is now underscored by the Board’s commitment to nonconsensual resolution.

The bondholders remain willing to promptly resolve PREPA’s bankruptcy case using rates that the Board has said would be fair and affordable. In addition to agreeing to take back 50-year replacement bonds that would have no fixed principal payments and interest that could be accrued rather than paid if needed, the bondholders’ proposal would also provide $2.5 billion of new funding to pay for PREPA’s bankruptcy exit and to begin paying for urgently needed improvements to PREPA’s electric system.

Thus far, all of Puerto Rico’s bankruptcies have been resolved consensually, in keeping with PROMESA’s overarching aim of restoring its market access. The Board’s current plan to vitiate bondholder rights at PREPA will be long and fruitless.

The secured and properly perfected bondholders are entitled to have their rights respected and the people of Puerto Rico are entitled to a reliable electric power system. The Board’s costly and reckless behavior must end.”

Contacts
Longacre Square Partners
Joe Germani / Ashley Areopagita
[email protected]

The ‘A+’ IDR of Indiana Municipal Power Agency’s (IMPA) and its bond ratings reflect Fitch Ratings’ very strong revenue defensibility, supported by the IMPA role as a wholesale power supplier serving 61 member-utility systems and the strong credit quality of the largest members. Members are bound by long-term, take-and-pay power supply contracts (PSCs), which ensure full cost recovery of all of IMPA’s costs.

Access Report

Mon 06 Jan, 2025

Florida’s revenues are primarily driven by sales tax receipts. Fitch anticipates that Florida’s revenues will grow in line with or above U.S. GDP growth over the long term, based on the state’s economic and demographic fundamentals. The state maintains ample expenditure flexibility with low carrying costs related to debt and retiree benefits and the broad expense-cutting ability common to most U.S. states. Education and health and human services, including Medicaid, are the key drivers of the general revenue budget. Florida’s long-term liability burden is low and well below the median for U.S. states. Outstanding debt has steadily declined, driven by lower new money issuance and greater use of pay-as-you-go capital spending. Florida remains well positioned to maintain a high level of fundamental financial flexibility through economic downturns, with broad expenditure and revenue controls buttressed by robust reserves. Sound financial management practices, including a history of prompt action to maintain fiscal balance and reserves, are an important mitigant to above average revenue volatility.

Access Report

Thu 26 Dec, 2024

The ‘AA+’ rating on the sales tax revenue education bonds reflects strong growth prospects for state sales tax collections, the source of revenues pledged to the bonds and the resilience of the bond structure. Available sales tax collections, net of distributions that come ahead of the SMF Fund distribution, provide strong coverage of maximum debt service.

Access Report

Fri 27 Dec, 2024

Chester will be preparing for what it hopes will be a prominent role in the nation’s 250th birthday party. And the new year looms as one of the most-eventful ones in a history that predates even William Penn’s landing where the Delaware River meets Chester Creek.

But in 2025, Delaware County’s only city will reach a milestone it would prefer not to mark.

Confronting overwhelming debts, on Jan. 24, 1995, then-Mayor Barbara Bohannan-Sheppard asked Pennsylvania to declare Chester officially “distressed,” and after finding what they described as “municipal chaos,” state investigators assented three months later.

Continue reading.

msn.com

Story by Anthony R. Wood, The Philadelphia Inquirer

The ‘A’ rating on the bonds and Issuer Default Rating (IDR) reflect Kentucky Municipal Energy Agency’s (KYMEA) very strong revenue defensibility, supported by the long-term, take-and-pay power sales contracts (PSCs) signed with its all-requirements members, as well as by rate-setting requirements pursuant to those contracts that provide for an unlimited re-allocation of costs in case of member default. The ratings also consider KYMEA’s evolving profile, including the expected loss of its largest member in 2029 and transitioning business strategy, as well as the credit quality of the agency’s broad pool of purchasers. KYMEA’s strong operating risk profile, evidenced by a low operating cost burden and flexible and diverse mix of power supply, and its strong financial profile are also important rating considerations.

Access Report

Wed 18 Dec, 2024

The ‘AA+’ water revenue bond rating and ‘AA+’ IDR reflect the district’s ‘Very Strong’ financial profile within the framework of ‘Very Strong’ revenue defensibility and ‘Very Strong’ operating risk profile, both assessed at ‘aa’. The district’s leverage, measured as net adjusted debt to adjusted funds available for debt service (FADS), was very low at 6.7x in fiscal 2024 (FYE June 30th) and is expected to peak at 7.8x by fiscal 2028. It generally averages 7.0x over the five-year period through fiscal 2029 in Fitch’s Analytical Stress Test (FAST) rating case, retaining marginal headroom for the rating as it progresses through a capital expansion. The rating could come under pressure should leverage exceed 8.0x on a consistent basis. The district’s five-year capital improvement plan (CIP) includes the Jordan Valley Water Treatment Plant (JVWTP) expansion and related infrastructure. Updates to the district’s longer-range forecast include lower water sales than historically projected, reflecting the effect of drought and conservation measures, but planned rate increases have also been adjusted to partially offset the lower volumes.

Access Report

Tue 17 Dec, 2024

• Mayor Johnson and aldermen battled for weeks to close deficit
• Chicago faced statutory deadline to pass a budget by Dec. 31

The Chicago City Council approved an approximately $17 billion budget for 2025 that raises levies and fees by more than $180 million after Mayor Brandon Johnson removed his proposed property tax hike.

The spending plan comes after weeks of contentious talks between the Johnson administration and aldermen over how to close a nearly $1 billion deficit with higher taxes or cuts. The depth of disagreements had raised concerns about whether a budget would pass by the Dec. 31 statutory deadline. The budget passed 27 to 23 on Monday.

“I know this was a long and arduous process,” Johnson said in remarks in the council chamber after the votes. “The budget we passed today is yet another down payment on securing a better, stronger and a much safer future for the people of this fine city.”

Continue reading.

Bloomberg Economics

By Shruti Singh

December 16, 2024

White Lake Township was “a victim of a sophisticated cybersecurity attack,” its police chief said. The incident has compromised a portion of $29 million in infrastructure bond funds. Federal authorities and local police are investigating.

(TNS) — White Lake Township officials are grappling with a cybercrime that has compromised at least some of its $29 million in infrastructure bond money.

During a Nov. 19 meeting, White Lake Township board of trustees celebrated progress on construction of the $35 million new civic center complex on Elizabeth Lake Road.

Treasurer Mike Roman said he thought the contractor would be able to pour the civic center foundation before the winter weather hit. He told trustees in two days, on Nov. 21, the township would take possession of $29 million in bonds approved for the project.

Continue reading.

December 06, 2024 • Peg McNichol, The Oakland Press, Sterling Heights, Mich.

The California School Finance Authority has closed its 150th conduit financing, a $5.7 million refinancing for two charter schools in Stockton, California.

Orrick served as bond counsel to the Authority for its issuance of its Charter School Revenue Bonds (Stockton Collegiate International Schools Project), Series 2024A and Series 2024B (Taxable).

Proceeds will support the Stockton Collegiate International Elementary School and the Stockton Collegiate International Secondary School. Together, the schools serve about 830 students in grades K-12.

THE AUTHORITY
The California School Finance Authority is California’s most active issuer of bonds, notes and secured loans for non-profit charter schools. It has issued nearly $3.5 billion in bonds, notes and secured loans supporting hundreds of schools and hundreds of thousands of students across California since 2010.

“While the 150th financing is a major milestone for CSFA and the Treasurer’s Office, our celebration is brief, as CSFA is slated to close nearly a dozen more financings before the end of this year,” said Fiona Ma, California State Treasurer and CSFA chair.

“The needs of California’s diverse populations of students and educators are as pertinent and pressing as ever, and we continue to focus on closing the gaps in equity of public services and resources in our state.”

THE TEAM
Orrick’s Marc Bauer led the team that advised the CSFA with support from Eugene Clark-Herrera, Sean Yates, Chas Cardall, Cathleen Chang, Emily Bills, Charnay Jones and Bonita McAlpine.

December.09.2024

• Island utility is seeking to restructure $9 billion of debt
• Parties are set to meet in court Wednesday before Judge Swain

There remains no clear path on how to best reduce the debt of Puerto Rico’s power utility, a mediation team warned US District Judge Laura Taylor Swain, who is overseeing the seven-year bankruptcy.

Recent negotiations have failed to bring about an agreement on how to restructure $9 billion of Puerto Rico Electric Power Authority debt or develop a framework on how to litigate certain disputes, the mediators wrote in their report that was filed Monday to the court. Litigation, as of now, would probably result in appeals and prolong the process, the mediators said.

“The mediation team believes there is simply no prospect for any mediated or consensual resolution here — and a litigated result is years away,” according to the mediation team’s report. “This is nothing short of a tragedy for the people of Puerto Rico.”

Continue reading.

Bloomberg Markets

By Michelle Kaske

December 9, 2024

• Muni bonds to fund public infrastructure improvements
• Deal is expected to have strong interest from high-yield shops

Deer Valley Resort, the winter playground for the Kardashians and others searching for slopeside luxury, is on its way to becoming one of the largest ski resorts in North America.

A five-minute drive from Park City, Utah, and under an hour away from the nearest international airport, a new development is expected to more than double the resort’s ski terrain with an additional 3,700 acres, 16 new lifts and a 10-passenger gondola.

A special district designed to fund public infrastructure is expected to borrow $300 million of high-yield municipal debt on Wednesday to support the resort. Proceeds of the bond sale will finance projects related to the development’s new addition called Deer Valley East Village.

Continue reading.

Bloomberg Markets

By Aashna Shah

December 11, 2024

SACRAMENTO, Calif. – Expanding and modernizing California’s electricity transmission infrastructure is critical to achieving its clean energy goals, but relying solely on traditional investor-owned utility (IOU) financing could significantly burden ratepayers. New analysis from Clean Air Task Force (CATF) and Net Zero California (NZC) finds that public-private financing models could save Californians up to $3 billion annually, or approximately $123 billion over 40 years. These findings are instructive for policymakers in California and other states and regions in need of more cost-effective transmission expansion and development.

“Achieving California’s ambitious climate goals will require unprecedented expansion of high-voltage transmission lines, and to do so, it’s essential the state rethinks how it approaches transmission financing and development,” said Nicole Pavia, Director of Clean Energy Infrastructure Deployment at CATF. “By embracing innovative solutions, California can protect consumers, save billions annually, and accelerate decarbonization while setting a national standard for building clean energy infrastructure efficiently and affordably. To meet the demands of a rapidly evolving energy landscape, we need bold action at the local, state, regional, and federal levels to modernize our transmission system, alleviate congestion, and connect new zero- and low-carbon resources – all without placing undue burdens on ratepayers.”

California’s ambitious climate goals will require an unprecedented expansion of high-voltage transmission lines, as outlined in the California Independent System Operator’s (CAISO) 20-Year Outlook. However, relying solely on traditional IOU models to finance a multi-billion-dollar infrastructure portfolio could result in significantly higher consumer rates.

The analysis highlights several cost-saving strategies that maintain development efficiency:

• Public Financing: Leveraging low-cost public debt to replace equity in the capital structure.
• Competitive Solicitation: Ensuring a competitive selection process for transmission line developers.
• Public Ownership: Reducing tax burdens through public ownership of infrastructure assets.
• Private Operations: Enhancing operational efficiency by engaging private entities.

With nearly 70% of U.S. transmission lines over 25 years old and projected underinvestment in the sector exceeding $40 billion annually by 2031, the need for innovative solutions is urgent. CATF and NZC’s findings demonstrate that leveraging public financing tools such as bonds, loans, and public-private partnerships can lower costs, mitigate ratepayer impacts, and accelerate grid modernization. In California, for example, replacing traditional IOU financing with a “lease-type” public-private partnership model could reduce costs by up to 57%, offering a scalable framework for adoption in other states.

A companion national-level policy brief from CATF, released today, underscores the broader relevance of these findings. Regions and states beyond California are similarly grappling with increasing ratepayer impacts and the need for significant transmission infrastructure expansion. The policy brief provides recommendations for practitioners in other geographies to conduct similar economic and policy analyses and consider adopting alternative financing models.

CATF sees great value in extending analysis of public financing infrastructure to other states seeking to modernize and expand their grid infrastructure while shielding ratepayers from rising costs.

Clean Air Task Force

December 2, 2024

Contact presse
Natalie Volk, Communications Manager, [email protected], +1 703-785-9580

Clean Air Task Force (CATF) is a global nonprofit organization working to safeguard against the worst impacts of climate change by catalyzing the rapid development and deployment of low-carbon energy and other climate-protecting technologies. With more than 25 years of internationally recognized expertise on climate policy and a fierce commitment to exploring all potential solutions, CATF is a pragmatic, non-ideological advocacy group with the bold ideas needed to address climate change. CATF has offices in Boston, Washington D.C., and Brussels, with staff working virtually around the world. Visit catf.us and follow @cleanaircatf.

The California Community Choice Financing Authority (CCCFA) has issued more than $4.6 billion in “green bonds” to support renewable energy projects. That includes $1.5 billion in Series 2024B bonds on behalf of the Clean Power Alliance of Southern California (CPA).

Orrick acted as bond and tax counsel on the project, the largest tax-exempt renewable energy financing to date. The CCCFA/CPA bonds used an innovative financing structure Orrick helped develop and improve over several years.

The Bond Buyer has named the transaction its 2024 ESG/Green Financing Deal of the Year.

Proceeds from the bonds will help the CPA secure a 30-year supply of renewable energy and related storage.

THE COMPANIES
Five community choice aggregators formed the CCCFA in 2021, with the goal of reducing the cost of power purchases for its members.

The CCCFA issues Clean Energy Project Revenue Bonds (designated as “green bonds”) to help fund renewable energy projects.

THE IMPACT
The transaction secured 30 years of solar and storage, enabling CPA to provide over 225,000 homes a year with clean energy.

“The bond structure achieved record customer savings and demonstrated how large-scale green financings can make a lasting environmental and economic impact,” The Bond Buyer said.

THE TEAM
Orrick’s George Wolf led the team that advised the CCCFA. The team included John Stanley, Brandon Dias, Damon Pace, Sean Yates and Orlando Zaragoza.

The Los Angeles Unified School District has secured $2.9 billion in tax-exempt bonds in a deal The Bond Buyer recognized in its Deal of the Year awards.

Orrick represented the school district as disclosure counsel in a deal Bond Buyer named a winner in the Far West category of its Deal of the Year awards.

THE COMPANIES

The second largest public school district in the nation, the Los Angeles Unified School District enrolls more than 400,000 students in transitional kindergarten through 12th grade. The district covers 710 square miles and includes the City of Los Angeles as well as all or parts of 25 smaller municipalities plus several unincorporated sections of Los Angeles County.

THE IMPACT

The Los Angeles Unified School District received funding through Build America Bonds (BABs) authorized by the American Recovery Reinvestment Act of 2009.

The BAB program allowed tax-exempt bond issuers to sell taxable bonds instead and receive an interest subsidy from the federal government. A few years later, though, Congress reduced those subsidy payments.

The Los Angeles Unified School District refunded its BABs into tax-exempt bonds in 2024.

The “groundbreaking $2.9 billion transaction was a key element in helping secure market access for future issuers looking to achieve savings and remove the risk of further reductions to their federal BABs subsidies,” according to The Bond Buyer Deal of the Year nominating statement.

THE TEAM

Donald Field led the Orrick team that advised the Los Angeles Unified School District. The team also included Chas Cardall, Kevin Hale and Haley Ritter.

November.26.2024

Baltimore officials are leveraging blockchain to streamline property title recordation to make real estate transactions more efficient.

In an effort to revive vacant properties and expedite real estate transactions, Baltimore is using a blockchain-enabled platform to manage property title records.

Launched last week, the platform offers a secure system to provide verified, immutable property data to users, which will help reduce title fraud and decrease the time it takes to complete real estate transactions, city officials said in a statement.

“This initiative is part of the city’s ongoing commitment to utilizing cutting-edge technology to improve public services and foster a more efficient real estate market,” officials said.

The blockchain system will be particularly helpful for bringing vacant properties in the city back on the market more efficiently, said Alice Kennedy, housing commissioner at the Baltimore City Department of Housing.

There are an estimated 13,000 abandoned houses and buildings in Baltimore. They cost the city about $100 million in lost tax revenue annually and are likely to depreciate the value of nearby properties too, according to a 2022 report from the Abell Foundation.

“When we sell property to a developer, and then the developer sells it to a homeowner, having the [title] information and the blockchain technology … can make those subsequent real estate transactions go faster,” Kennedy said. It will help recover lost property taxes and rebuild communities, she added.

Blockchain technology can also lead to a reduction in paperwork and the need for intermediaries to handle real estate transactions, which can lower transaction costs for buyers and sellers, said Stephen Salsbury, deputy solicitor at the Baltimore City Law Department, in an email to Route Fifty.

The city partnered with Medici Land Governance to develop a blockchain ledger using property data from the Maryland State Archives last year.

Route Fifty

By Kaitlyn Levinson,
Reporter, Route Fifty

November 14, 2024

The ‘AAA’ bond ratings and Issuer Default Rating (IDR) reflect the Metropolitan Water Reclamation District of Greater Chicago’s (the district) ‘Very Strong’ financial profile in the context of its ‘Very Strong’ revenue defensibility and ‘Very Strong’ operating risk profile, both assessed at ‘aa’. The district’s leverage, measured as net adjusted debt to adjusted funds available for debt service (FADS), was very low at 7.6x in 2023 (FYE Dec 31).

Access Report

Wed 04 Dec, 2024

Key Rating Drivers Portfolio Credit Risk: The pool is large with over 370 obligors; the top 10 obligors account for about 48% of the total loan portfolio, when security of obligations is consolidated. Great Lakes Water Authority’s (GLWA) sewer and water systems, the program’s largest obligors, are rated ‘AA-‘/’A+’ (senior lien/second lien) and ‘A+’/’A’ (senior lien/second lien), respectively by Fitch. When consolidated across liens, GLWA’s sewer obligations represent about 19% and water obligations are about 6% of the total pledged portfolio. The remaining top 10 obligors range in size from less than 2% to about 4%. Financial Structure: Fitch’s cash flow modeling demonstrates that annual program resources are sufficient to withstand hypothetical pool defaults in excess of Fitch’s ‘AAA’ liability rating stress hurdle, as derived using its PSM without causing an interruption in bond payments. The program’s cash flows reflect projected minimum annual debt service coverage of about 1.4x. The program has about $23.2 million in debt service reserve funds, which are anticipated to be depleted by 2026 as associated bonds mature.

Access Report

Thu 05 Dec, 2024

The ‘A+’ IDR reflects the city’s ‘bbb’ financial resilience assessment, which incorporates a ‘low midrange’ level of budgetary flexibility and Fitch’s expectation for maintenance of unrestricted general fund reserves (unassigned, assigned, and committed) of at least 5% of spending going forward. Fiscal 2023 unrestricted general fund reserves totaled $1.1 billion or 18.9% of spending. However, multi-year projections show reserve levels settling around the city’s reserve target of 6%-8%. Additionally, the ratings incorporate a +1 notch to reflect the fundamental strength of the city’s economic base. This enhances the city’s expected resilience to economic cycles and stress events relative to its elevated unemployment relative to the national rate and median levels of household income, which are well below the median of Fitch’s local government rating portfolio. Long-term liability (LTL) metrics are ‘midrange’ on a composite basis.

Access Report

Fri 06 Dec, 2024

The ‘AA+’ rating on the bonds backed by Ohio’s lease-appropriation pledge is one notch below the state’s ‘AAA’ Long-Term IDR, reflecting the slightly higher degree of optionality associated with the payment of annual appropriation debt. Ohio’s ‘AAA’ Long-Term IDR reflects the state’s high level of financial resilience and superior budget management, as evidenced by robust fiscal reserves and cash and a proven ability to absorb the effects of economic cyclicality and repeated tax policy changes. Ohio also has a low long-term liability burden and associated carrying costs.

Access Report

Fri 06 Dec, 2024

Key Rating Drivers Portfolio Credit Risk: The pool is large with over 370 obligors; the top 10 obligors account for about 48% of the total loan portfolio, when security of obligations is consolidated. Great Lakes Water Authority’s (GLWA) sewer and water systems, the program’s largest obligors, are rated ‘AA-‘/’A+’ (senior lien/second lien) and ‘A+’/’A’ (senior lien/second lien), respectively by Fitch. When consolidated across liens, GLWA’s sewer obligations represent about 19% and water obligations are about 6% of the total pledged portfolio. The remaining top 10 obligors range in size from less than 2% to about 4%. Financial Structure: Fitch’s cash flow modeling demonstrates that annual program resources are sufficient to withstand hypothetical pool defaults in excess of Fitch’s ‘AAA’ liability rating stress hurdle, as derived using its PSM without causing an interruption in bond payments. The program’s cash flows reflect projected minimum annual debt service coverage of about 1.4x. The program has about $23.2 million in debt service reserve funds, which are anticipated to be depleted by 2026 as associated bonds mature.

Access Report

Thu 05 Dec, 2024

• General obligation, sales-tax bonds deal expected on Thursday
• ‘No assurance’ budget will pass by Dec. 31 deadline: filing

Chicago is planning to sell about $806 million in municipal bonds this week as part of a refinancing as Mayor Brandon Johnson races to close a budget gap of nearly $1 billion by year end.

The city is expected to borrow $679.7 million of sales-tax-backed debt and $126.6 million of bonds tied to its general obligation pledge on Dec. 5. Proceeds will be used to refinance outstanding debt to save money and help close back-to-back shortfalls.

The sales come while Johnson and city council members disagree on how to fill a $982.4 million hole in next year’s budget. The mayor proposed a $300 million property-tax increase that aldermen unanimously rejected. Tensions have escalated so much that potential investors in the upcoming general obligation bond sale were warned there is “no assurance” that a spending plan will be passed on time, according to offering documents.

Continue reading.

Bloomberg Markets

By Shruti Singh

December 2, 2024

• NYC housing agency to sell $550 million of munis for tower
• Blackstone bought 76-story tower in 2022 for $930 million

Blackstone Inc. is refinancing $550 million of municipal debt for 8 Spruce St., a 76-story residential tower in downtown Manhattan designed by famed architect Frank Gehry.

New York City’s Housing Development Corp., plans to price the debt Tuesday on behalf of Blackstone, which purchased the building for $930 million from Brookfield Asset Management Inc. and Nuveen LLC in 2022.

About $204 million of the securities are tax-exempt and are issued under the Liberty Bond program, part of a federal economic package approved in 2002 to help lower Manhattan recover from the 9/11 terrorist attacks.

Continue reading.

Bloomberg Markets

By Martin Z Braun

December 3, 2024

Since 2016, the Kansas City Area Transportation Authority has offered door-to-door trips from on-demand shuttles. Here’s what the transit operator has learned.

Few innovations in public transportation are trendier — or more controversial — than microtransit: on-demand shuttles that ferry passengers from origin to destination and cost little more than a bus fare.

For passengers, the appeal is clear. Who wouldn’t leap at the chance to take a door-to-door trip that is far cheaper than hailing an Uber? Advocates claim microtransit can bring people to public transit who would never otherwise consider it, while critics question the scalability of a service that can require eye-watering subsidies.

Few places have more microtransit experience than Kansas City, Missouri. In 2016, the Kansas City Area Transportation Authority became a pioneer when it partnered with Bridj, a now-defunct startup, to introduce on-demand shuttle trips. That experiment ended a year later, but it was quickly replaced by a similar app-based service called RideKC Freedom On Demand; now, Kansas Citians can request rides on IRIS, a microtransit program funded by local municipalities and managed by KCATA. Most IRIS fares are $3. (Since 2020, regular bus service in Kansas City has been free.)

Continue reading.

Bloomberg CityLab

By David Zipper

December 5, 2024

• Principal Street Partners was sole qualified bidder for firm
• Greenwich Investment Management filed for bankruptcy in May

Principal Street Partners, a Memphis-based investment firm, will acquire the clients of a bankrupt money manager that specialized in buying high-yield bonds issued for senior living facilities and charter schools.

A US Bankruptcy Court judge in the Middle District of Florida on Thursday approved the sale of Greenwich Investment Management to PSP, which runs high-yield and distressed muni separately managed accounts.

PSP, the sole qualified bidder, agreed to pay GIM $25,000 and 15% of management fees collected from GIM clients who sign new contracts for a period of three years after the sale closes. PSP had about $2.9 billion of assets under management as of Dec. 31 2023, according to documents filed with the US Securities and Exchange Commission.

Continue reading.

Bloomberg Markets

By Martin Z Braun

December 6, 2024

• Bonds will finance the infrastructure revamp at Terminal B
• Redevelopment project is expected to be completed by 2028

The municipal-bond market’s lagging run is opening up an opportunity for corporate-debt investors eager to secure extra yield.

Junk state and local government bonds have underperformed high-yield corporate debt during the selloff that raced through fixed-income markets over the past several months, pushing their yields up by more.

That’s created a gap between debt that United Airlines has sold in the corporate and municipal markets: its muni securities, which are tied to payments it makes on airport leases, are yielding half a percentage point more on a tax-adjusted basis than the airline’s other taxable obligations, according to an analysis by Bloomberg Intelligence.

Continue reading.

Bloomberg Markets

By Aashna Shah

November 19, 2024

The ‘AA’ waterworks and sewer revenue bond rating, along with the ‘aa’ Standalone Credit Profile, reflect the system’s ‘Very Strong’ financial profile in the context of its ‘Very Strong’ revenue defensibility and ‘Very Strong’ operating risk profile, both assessed at ‘aa’. The system’s leverage, measured as net adjusted debt to adjusted funds available for debt service (FADS), was very low, at 8.8x, in fiscal 2023 and is projected to peak at 9.9x in fiscal 2025 in Fitch Ratings’ Analytical Stress Test (FAST) rating case, as the final debt related to the Integrated Pipeline Project (IPL) is expected to be issued.

Access Report

Mon 18 Nov, 2024

The ‘AA’ Issuer Default Rating (IDR) reflects the ‘aaa’ financial resilience assessment based on an ample level of budgetary flexibility and assumes maintenance of unrestricted general fund reserves at least equal to 20% of spending, which the city significantly exceeds.

Access Report

Wed 20 Nov, 2024

The City of Austin, Texas plans to sell about $474 million of municipal bonds to finance capital improvements.

The city will issue $301.3 million of Public Improvement and Refunding Bonds and $103.5 million in Certificates of Obligation, according to preliminary official statement posted Thursday on MuniOS. The securities mature from 2025 through 2044. Austin will also sell $29.9 million of Public Property Finance Contractual Obligations due from 2025 through 2031.

Another $32 million of Public Improvement Bonds and $7.4 million of Certificates of Obligation will be available for purchase by investors. Both series are taxable and mature from 2025 through 2044.

A date of sale and initial pricing were unavailable. The securities are expected to be delivered on Dec. 19.

The bonds, the taxable bonds and the contractual obligations are direct obligations of the city and are backed by an annual ad valorem tax on eligible property, according to the official statement. The certificates and taxable certificates have the same pledge for repayment, along with a limited pledge of surplus revenue from the city’s solid waste disposal system.

Proceeds will be used to finance capital improvements, refund for savings portions of the city’s outstanding general obligation debt, and purchase equipment and other personal property for use by various city departments.

Austin’s five-year capital improvement program estimates city-wide spending of $2.2 billion in fiscal year 2025.

S&P Global Ratings assigned the securities a rating of AAA, and Fitch Ratings has rated them at AA+.

Piper Sandler & Co. and Baird are lead managers for the sale.

Dow Jones

By Zaeem Shoaib

Write to Zaeem Shoaib at [email protected]

November 22, 2024 17:47 ET (22:47 GMT)

Copyright (c) 2024 Dow Jones & Company, Inc.

Illinois’ Sales Tax Securitization Corp. plans to issue $679.7 million in municipal bonds to refinance outstanding debt.

The entity is a non-profit organization linked to the City of Chicago, according to preliminary documentation posted on MuniOs.

The corporation will issue $142.1 million of Sales Tax Securitization Bonds, Refunding Series 2024A, and $404.2 million of Second Lien Sales Tax Securitization Bonds, Refunding Series 2024A, that are exempt from federal taxes.

Also, the corporation will issue $133.4 million of Second Lien Sales Tax Securitization Bonds, Taxable Refunding Series 2024B, that are federally taxable.

The bonds are payable from sales tax revenues.

Proceeds from the issuance will mostly be used to refund outstanding obligations of the city.

S&P Global Ratings has assigned a AA- rating to all three series of bonds. Fitch Ratings has rated the Sales Tax Securitization bonds at AAA and the Second Lien bonds at AA-.

RBC Capital Markets and Ramirez & Co. are leading underwriters.

Dow Jones

By Paulo Trevisani

Write to Paulo Trevisani at [email protected]

(END) Dow Jones Newswires

November 25, 2024 13:52 ET (18:52 GMT)

Copyright (c) 2024 Dow Jones & Company, Inc.

Abilene Christian University has entered into a long-term energy-as-a-service (EaaS) partnership with Bernhard, a leader in energy infrastructure, to enhance the university’s energy efficiency and sustainability.

Orrick advised ACU as bond and special tax counsel.

THE PARTIES

Abilene Christian University serves a diverse student population of about 6,700 with world-class teaching in a Christ-centered community.

Founded in 1906, this national research university offers online and residential undergraduate and graduate programs. Students choose from 87 baccalaureate majors that include more than 171 areas of study, as well as 71 areas of study in master’s degree and specialist programs and four doctoral programs.

ACU’s mission is to educate students for Christian service and leadership throughout the world.

Bernhard is an energy infrastructure firm headquartered in New Orleans, Louisiana. Founded in 1919, Bernhard’s core services span the U.S. and include engineering, fabrication, construction, asset management and energy-as-a-service for customers in health care, higher education, hospitality, industrial and other market segments. Bernhard has 24 U.S. offices and more than 2,200 full-time employees.

THE IMPACT

The partnership allows ACU to better focus on its core mission of student success and academic excellence, the university said.

Over the past several years, ACU has made significant investments in its central plant, with $15 million recently allocated for upgrades. The partnership will free up significant capital resources to accelerate change and tap into Bernhard’s expertise in optimizing energy systems. This agreement ensures the university can complete necessary projects faster and more efficiently, enhancing student comfort and reallocating resources toward academic initiatives.

“Our partnership with Bernhard represents a significant step forward in our commitment to sustainability and operational excellence,” said Dr. Phil Schubert, ACU president.

A key component of the project is the installation of an 18 MWac solar array, designed to offset existing utility costs and provide long-term cost certainty.

Also, critical upgrades to the campus’s central cooling and heating systems will improve resilience to support ACU’s growth. The project also includes operational improvements, such as upgrades to HVAC, building automation and lighting systems, which will enhance energy efficiency and significantly reduce operational costs.

THE TEAM

Charles Cardall led the Orrick team that advised Abilene. The team also included Jerry Kyle. Larry Sobel, Amanda Stephens, Cathleen Chang and Jessica Doherty.

November.11.2024

• Sage Hill School is taking on $54 million in debt to expand
  ]The high school is planning to begin teaching middle school

An elite private high school in Newport Beach, California, the home of bond-fund firm Pacific Investment Management Co., is making its own foray into the debt market.

The Sage Hill School, whose board of trustees includes executives from Pimco, Goldman Sachs Group Inc., and video-game maker Activision Blizzard Inc., is selling about $54 million of municipal bonds to build a middle school and new athletic facilities. The school said it’s the biggest capital project since it was founded.

Sage Hill is the latest California private school that’s turning to the public debt market to raise cash, joining the college-like push to keep luring new students with new amenities.

Continue reading.

Bloomberg Markets

By Erin Hudson

November 12, 2024

• Pasadena authority to sell bonds to refund taxable BAB debt
• The refinancing avoids any tax move that may raise costs

Managers of the Rose Bowl, the 102-year-old stadium northeast of Los Angeles, head to Wall Street this week to refund taxable Build America Bonds into tax-exempt debt.

The iconic stadium’s municipal guardians are looking to capitalize on favorable market conditions. They also will sidestep any potential tax law changes from the incoming Trump administration that might increase interest costs on bonds from the Obama-era BAB program.

The Pasadena Public Financing Authority is selling about $105 million of lease revenue refunding bonds beginning Wednesday. The negotiated refinancing, led by Stifel Financial Corp. and Raymond James Financial Inc., targets $106.6 million in Build America Bonds issued in 2010 to expand the Rose Bowl’s concourses, build new premium seating and update broadcast facilities.

Continue reading.

Bloomberg Markets

By Maxwell Adler

November 13, 2024

Watch video.

Bloomberg Muni Moment

Bloomberg Markets: The Close

November 15th, 2024, 3:02 PM PST

The University launched a new center on Oct. 29 aiming to train students to raise capital to fund public works projects.

The new initiative, called the Center on Municipal Capital Markets, joined the LBJ School of Public Affairs, according to a press release. It will teach graduate students about the process of issuing bonds to finance and build public infrastructure, such as roads, bridges, telecommunications and water systems, Center Director Martin Luby said. As part of the training, students will also advise professionals, such as financial advisors and law firms, about how to complete these transactions.

Luby, an associate professor of public affairs, said public infrastructure has decayed over the past few decades. However, under President Joe Biden’s Bipartisan Infrastructure Deal, which invested trillions in transportation and infrastructure nationwide, physical infrastructure received substantial investments. The center will continue that momentum, Luby said.

Continue reading.

The Daily Texan

Laura Rivera, Senior News Reporter

November 14, 2024

• Interest rate savings of $110 million expected with the deal
• Munis have been volatile this week because of US elections

Chicago plans to tap the muni market for $1.5 billion early next month to refinance its debt as it looks to capitalize on the Federal Reserve lowering interest rates.

The city will have $850 million in general obligation bonds available to replace with new debt. The deal, which also includes a debt buyback process, is expected to generate $110 million in savings.

“We are planning on pricing the first week of December,” Chicago Chief Financial Officer Jill Jaworski said in an email on Friday. “We do not have any comments on how day-to-day market movements impact the sale.”

Continue reading.

Bloomberg Markets

By Shruti Singh

November 8, 2024

The ‘AAA’ rating reflects the ability of the Colorado Water Resources and Power Development Authority’s combined clean water and drinking water state revolving fund bond programs’ (together, the program) financial structure to absorb hypothetical pool defaults in excess of Fitch Ratings’ ‘AAA’ liability stress hurdle without causing an interruption in bond payments. The program is above average in size at 299 obligors, which results in a pool that is less concentrated than its peers. The program’s cash flows are very strong, as projected minimum annual debt service coverage (DSC) is about 3.5x. Program management adheres to a formal underwriting policy that includes minimum DSC requirements for borrowers.

Access Report

Thu 07 Nov, 2024

The upgrade of the 2006A & 2006B bonds reflects improved long-term resilience of the structure to very strong levels, as well as growth prospects for pledged District ballpark fees and utility tax revenues in line with inflation following recent volatility. Fitch does not incorporate stadium-related revenues into its analysis given their volatility and unpredictability.

Access Report

Mon 04 Nov, 2024

The ‘A’ ratings for the New Jersey Educational Facilities Authority capital improvement fund and higher education facilities trust fund refunding bonds are one notch below New Jersey’s ‘A+’ Issuer Default Rating. New Jersey’s revenue system is very diverse and sensitive to economic trends. Fitch expects natural growth in expenditures over time to be above revenue growth, driven by program spending demands. The long-term liability burden is elevated and higher than those of most U.S. states, reflecting considerable outstanding debt and a large net pension liability. Gap-closing capacity has strengthened significantly in recent years, with ending balances well above historical levels.

Access Report

Thu 07 Nov, 2024

• Firm is working with adviser to explore strategic options
• Preston Hollow has raised $1.6 billion from investors over time

Preston Hollow Community Capital, a municipal finance lender, is exploring strategic options including a sale, according to people with knowledge of the matter.

The Dallas-based company is working with an adviser to solicit interest from potential suitors, said the people, who requested anonymity to discuss confidential information. No final decisions have been made and a transaction isn’t guaranteed.

Preston Hollow has invested more than $5.2 billion in municipal bonds since its founding in 2014 and has raised $1.6 billion from investors including Stone Point Capital, HarbourVest Partners and Nuveen LLC’s TIAA, according to a September release.

Continue reading.

Bloomberg Markets

By Gillian Tan

October 29, 2024

• Railroad’s unrated muni bonds gain about 13% since April
• John Miller fills First Eagle’s muni portfolio with the debt

Bond investors are snapping up the riskiest chunk of Brightline’s debt in a wager on the private railroad as it expands west across Florida.

Investors, drawn by a 12% coupon, have bid up Brightline’s $925 million of unrated-tax exempt bonds so much that they’re valued at about 105 cents on the dollar. They’ve returned some 13% since April, when the Fortress Investment Group-backed company refinanced its debt with nearly $4.5 billion in muni bonds and junk notes.

Among the reasons the unrated debt is appealing to investors: collateral. They’re secured by a lien on current and future assets including design contracts, permits, and rights-of-way that are earmarked for Brightline’s project to stretch its tracks from Orlando to Tampa.

Continue reading.

Bloomberg Markets

By Martin Z Braun

October 31, 2024

• Center to be housed within the public affairs graduate school
• Program to meet infrastructure needs due to climate, energy

The University of Texas at Austin is launching a new center dedicated to the municipal bond market, ahead of an anticipated boom in infrastructure investments.

Dubbed the Center on Municipal Capital Markets, the new initiative will be housed under the institution’s Lyndon B. Johnson School of Public Affairs. It’s part of a broader push by university president Jay Hartzell to address extreme weather as a result of climate change and the energy grid’s transition to renewable power.

“Our future as a growing, resilient society depends upon our ability to wisely invest in infrastructure, especially in the important energy sector,” Hartzell said in an emailed statement. “Tomorrow’s leaders need to understand the role of capital markets in making those investments possible.”

A rush of public projects is anticipated after decades of infrastructure disinvestment and increasing needs driven by climate change, said Martin Luby, a professor of public affairs and the center’s founding director.

“There’s clearly a need for education, training and thought leadership in this area, and I think it’s just even more acute given what we think is going to happen in terms of increased infrastructure investment in the future,” Luby said in an interview. “When we think about capital financing it’s all hands on deck and we’re going to try to cover it as much as possible.”

Municipal bond sales have already surged this year, totaling $426 billion since the start of January, a 41% increase from the same period in 2023, according to data compiled by Bloomberg. Texas issuance is a major chunk of that deluge, with about $60 billion of debt.

That comes as Texas’ public finance market has been in flux for several years after state lawmakers passed two laws targeting Wall Street banks for their policies regarding fossil fuels and firearms — legislation that has reshuffled the muni underwriter rankings in the state.

The new center will train students on how to use the capital markets to strengthen communities and their infrastructure. Starting in September 2025, some students will conduct fellowships with municipal-finance firms including Moody’s Corp. and Public Financial Management, Inc, according to Luby.

The center will also produce research and policy reports, as well as host an annual conference and outreach events for issuers. The first research report is slated for publication next year and examines the reserves needed for certain borrowers to absorb shocks related to natural disasters including wildfires, tornadoes, hurricanes and drought.

Continuing education courses for public finance professionals are expected to launch in the 2026-2027 academic year.

Luby said the center is looking to bring on a new hire with experiencing raising money in the muni market to focus on fundraising.

“Whether that’s someone who’s a former investment banker or CFO-type — that wants to transition into higher ed and help us build out this program,” he said.

The center’s advisory council includes industry professionals including Municipal Securities Rulemaking Board’s chief executive Mark Kim.

Bloomberg Markets

By Erin Hudson

October 29, 2024

AUSTIN, Texas — One of the nation’s only university-based centers to focus on capital market financing for public infrastructure projects will strengthen the ability of communities to build schools, roads and hospitals and make critical infrastructure, including energy systems, more resilient. The Center on Municipal Capital Markets (CMCM), launched by the LBJ School of Public Affairs at The University of Texas at Austin, will provide specialized training and research so that government entities can effectively leverage private capital for these public needs.

The center will train graduate students and host programs to educate professionals about how to leverage markets to have sufficient funding for projects they are pursuing. The importance of leveraging government resources for infrastructure development and maintenance has grown as recent federal initiatives aim to revitalize infrastructure after years of disinvestment.

“Our future as a growing, resilient society depends upon our ability to wisely invest in infrastructure, especially in the important sectors of health care, transportation and energy. Tomorrow’s leaders need to understand the role of capital markets in making those investments possible,” said UT President Jay Hartzell. Hartzell holds degrees in economics and finance and has expertise in corporate finance. “The LBJ School will equip both governmental leaders and capital market participants with the expertise to think creatively to solve the financial challenges of infrastructure development and maintenance, and to ultimately change the world for generations to come.”

Municipal capital markets allow government entities to raise funds for essential public infrastructure projects — such as schools, highways, hospitals, water, wastewater and energy systems — by selling bonds to private investors. These investments enhance the quality of life in communities and promote long-term economic growth by ensuring access to vital services. They also improve community resilience by preparing public systems to withstand challenges such as extreme weather while ensuring sustainability and reliability over time. This makes municipal capital markets a crucial tool for financing large-scale infrastructure projects that would otherwise be unaffordable through traditional funding methods.

CMCM will focus on four key areas:

• Undergraduate, graduate and continuing education for emerging and seasoned public finance professionals.
• Hands-on training and experiential learning.
• Applied research.
• Public outreach.

The foundation for CMCM was built during an event in December 2023, where more than 100 leaders from various public finance organizations, convened by LBJ School professor and the center’s inaugural director, Martin Luby, in collaboration with the Bond Dealers of America, discussed innovative approaches to infrastructure finance.

“Developing the next generation of professionals and advancing research and dialogue on the municipal capital markets is especially salient given the huge infrastructure needs we have in the United States,” said Luby, who teaches public and municipal finance courses at UT. “The Center on Municipal Capital Markets will address how such capital investments affect the macroeconomy, the local economies of state and local governments, as well as the day-to-day lives of all citizens.”

Luby has published widely on innovative government financial instruments, federal financing techniques, regulation of the municipal securities market, and the role of financial intermediaries in state and local government financings. He also has extensive banking, consultant and advisory experience with many state and local governments, as well as with the federal government. In addition to his research and advising, Luby has been at the forefront of initiatives to cultivate talent for the public finance sector, teaching more than 1,000 students and developing opportunities for research, education and experience in the public finance field.

CMCM has constituted a 16-member advisory council composed of national leaders in the municipal capital.

“I am honored to serve on the inaugural advisory council for the launch of the Center on Municipal Capital Markets at the LBJ School of Public Affairs,” said Mark Kim, CEO of the Municipal Securities Rulemaking Board. “I applaud CMCM’s dual mandate of teaching undergraduate and graduate students about the critical role of the municipal securities market in financing this nation’s public infrastructure, as well as empowering government finance professionals with a greater understanding of the capital markets through continuing education, training opportunities and academic research.”

CMCM has already introduced a Certificate in State and Local Finance for LBJ School students and is producing technical reports for clients on municipal finance.

“We are not only exploring solutions to the world’s most pressing problems but also developing innovative financing strategies for these solutions,” said LBJ School Dean JR DeShazo. “I am thrilled about the career opportunities this center will create and the impactful solutions our students will develop.”

Oct 29, 2024

Taxpayers in Payson, Ariz., are no longer on the hook for a massive debt after the Goldwater Institute and local residents raised concerns about the legality of the town’s inclusion of a so-called “emergency clause” for the sale of $70 million in bonds.

Payson officials had authorized the sale of $70 million in municipal bonds in August, using an “emergency” clause to bypass the democratic process and deny residents the opportunity to put the controversial bond measure to a popular vote. The purported “emergency” was nothing more than the Town Council’s desire to secure a bond quickly, as officials speculated that interest rates might slightly increase in the coming months.

The Goldwater Institute filed a lawsuit challenging the sham “emergency” measure on behalf of a local resident, pointing out that the Arizona Constitution and state statute guarantee the right of referendum—that is, voters’ rights to refer a bill, ordinance, or resolution to the ballot and vote on it.

The case is currently on appeal, but in the meantime, Payson voters and taxpayers have already received some great news. Last week, the Town Council voted to repeal the problematic resolution, cancelling the “emergency” bond sale.

The court battle against governments’ abuse of emergency clauses isn’t over—indeed, local governments throughout the state routinely bypass democratic accountability using “emergency” clauses. We’re fighting back to ensure government can’t steamroll its own citizens and deny them rights afforded under Arizona’s constitution.

You can read more about the case here.

The Goldwater Institute

by John Thorpe

October 30, 2024

John Thorpe is a Staff Attorney at the Goldwater Institute.

• Expanded grounds will house athletic facilities, public park
• $88 million in bonds will bridge the project’s fundraising gap

Harvard-Westlake School, one of the country’s most exclusive private schools famous for educating generations of Hollywood stars, is tapping the public debt markets for the first time.

The school plans to borrow nearly $90 million of municipal bonds to finance a new athletic campus in Los Angeles’ Studio City. The project, which is years in the making, will transform the former site of a neighborhood tennis and golf facility into a sprawling park that will house state-of-the-art spaces for Harvard-Westlake’s 90 sports teams, according to bond documents. The undertaking — mostly funded through donations — will feature an Olympic-sized swimming pool, eight tennis courts, a club house and putting green.

“We’re so limited with space on this campus,” Beth Slattery, head of Harvard-Westlake’s Upper School, told the school’s student newspaper earlier this year. “This really frees us up to be able to do things and I’m excited about it.”

Continue reading.

Bloomberg Markets

By Erin Hudson

October 29, 2024

• Muni market sees return of fixed-base operator company
• Million Air to expand facility in Austin that opened in 2019

Million Air, a luxury aviation company catering to the ultra-rich and high-flying executives, is borrowing $120.5 million from Wall Street to expand its operations in Austin to meet pent-up demand for hangar space to park private jets.

Originally founded for the Mary Kay Inc. cosmetics company, a wholly-owned subsidiary of Million Air’s parent company plans to tap the municipal debt market in November. Proceeds from the sale will be used to roughly double the size of Million Air’s facilities at the Austin-Bergstrom International Airport, which is among the top 25 busiest in the US for business jet operations.

Some of the bond money will also go toward adding enhancements to the company’s facilities in Marathon, Florida. Raymond James is underwriting the unrated bond offering.

Continue reading.

Bloomberg Wealth

By Erin Hudson and Amanda Albright

October 28, 2024

The state of California’s ‘AA’ Long-Term IDR incorporates the state’s large and diverse economy, which supports strong, albeit cyclical, revenue growth prospects, a solid ability to manage expenses through the economic cycle and a moderately low level of long-term liabilities. Strong fiscal management, institutionalized across administrations and demonstrated through the buildup of the budgetary stabilization account (BSA) and elimination of past budgetary borrowing, allows the state to withstand economic and revenue cyclicality.

Access Report

Wed 23 Oct, 2024

Overview

California school districts entered fiscal 2025 in a position of financial strength, partly as a result of record per pupil funding and unprecedented one-time state and federal stimulus through the years following the peak of the pandemic. These extraordinary fiscal supports have thus far helped mitigate the challenges of broad school-age population declines and rising fixed costs. However, in S&P Global Ratings’ view, key challenges could lead to credit pressure over the near term, including the risk that state aid will fail to keep up with rising fixed costs and increased expenditures. We also expect California school districts’ reserve positions will weaken over the next year as districts focus on aligning continuously growing expenditures with revenue in the absence of Elementary and Secondary School Emergency Relief (ESSER) funding.

S&P Global Ratings evaluates the ratings on 687 school districts across California, including school facilities improvement districts. In the period from Aug. 24, 2023, to Aug. 12, 2024, we raised ratings on 16 school districts (2% of the total) and lowered nine (1%). Furthermore, we revised the rating outlook on 15 districts (2%), putting six (1%) on positive and nine (1%) on negative. The rating outlooks on the remaining 672 districts (98%) remained stable during this period. Following the release of our “Methodology for Rating U.S. Governments,” published Sept. 9, 2024, on RatingsDirect, we placed 63 California school district ratings under criteria observation (UCO), signaling that we could affirm the ratings or change them as a result of the application of new criteria. For more information on the UCO designation and our plan for reviewing ratings under the new criteria, see the UCO list and “FAQ: A Closer Look At The New Methodology For Rating U.S. Governments,” published Sept. 9, 2024.

Continue reading.

22 Oct, 2024

The ‘AAA’ rating on the subordinate future tax-secured (FTS) revenue bonds reflects solid long-term growth prospects for pledged revenue and the bonds’ highly resilient structure. Fitch Ratings anticipates the bond structure can withstand changes in economic cycles and maintain solid debt service coverage.

Access Report

Tue 22 Oct, 2024

Fitch Ratings considers the monthly residential water and sewer bill affordable for about 76% of the service area population based on standard monthly usage of 7,500 gallons for water and 6,000 gallons for sewer. The midrange service area is characterized by average income levels, a moderate unemployment rate relative to the nation and midrange customer growth. In fiscal 2023, the system’s operating cost burden was considered very low at $2,805 per million gallons (mg), consistent with the operating risk assessment. The life cycle ratio is elevated at 48% in fiscal 2023. The system had moderate leverage of 8.3x as of fiscal 2023, slightly below the 8.7x average of the prior four fiscal years. The Philadelphia Water Department provides potable water to all of the approximately 1.6 million residents of the city and accounts in neighboring Montgomery and Delaware counties per a wholesale agreement.

Access Report

Tue 22 Oct, 2024

The State of Washington’s ‘AA+’ Long-Term IDR and GO bond ratings reflect its broad and growing economy, with solid long-term revenue growth prospects, and the state’s demonstrated commitment to maintaining fiscal balance. The ratings also reflect long-term liabilities that place a low burden on the economic resource base. The ‘AA+’ ratings also incorporate the state’s very strong financial resilience, which is supported by a statutory requirement for a balanced four-year budget and formulaic funding of the budget stabilization account (BSA); the latter has led to the accumulation of solid fiscal reserves. Education poses continued spending pressure for the state given steady population growth and the state’s role as the primary funding source for K-12 public schools.

Access Report

Wed 23 Oct, 2024

Financial technology and data services provider and exchange operator Intercontinental Exchange (ICE), announced the launch of a new climate transition risk solution targeted at underserved segments of fixed income including municipals, securitized mortgage-backed securities (MBS) and real estate.

According to ICE, the new solution will provide emissions estimates and portfolio analytics across various fixed income asset classes, covering Scope 1, Scope 2 and Scope 3 emissions for municipal bonds, MBS, and real estate, expanding ICE’s existing coverage of sovereign, corporate equity, and private companies to help enable clients to assess and benchmark financed emissions across a comprehensive range of fixed income asset classes in one integrated offering.

Larry Lawrence, Head of ICE Climate, said:

“Our clients increasingly need quality transition risk data for underserved segments, particularly mortgage-backed securities, where we have applied physics-based simulations with building energy models and ICE’s data to provide emissions insights for RMBS and CMBS. Mortgages and mortgage securities can represent more than 20 percent of bank balance sheets, leading to a growing need for data to help meet regulatory disclosure and support stress testing to inform decision-making.”

ICE said that the new solution will “address gaps in emissions data by covering underserved sub-asset classes, such as residential mortgage-backed security, commercial mortgage-backed security, and private corporates,” as well as municipal bonds.

ICE’s multi-asset class transition risk solution provides financed emissions data based on criteria of the Partnership for Carbon Accounting Financials, which provides financial institutions with data on compliance with aspects of the Paris Climate Agreement, encompassing over 110 million US properties and more than 4.2 million fixed income securities globally. ICE’s methodologies, customized for each asset class, provide comprehensive emissions tracking, including Scope 1, 2, and 3 estimates, as well as carbon intensity metrics, which organizations need to meet climate regulatory reporting requirements, the company said.

by ESG Today Writing Staff

October 15, 2024

• Muni market sees return of fixed-base operator company
• Million Air to expand facility in Austin that opened in 2019

Million Air, a luxury aviation company catering to the ultra-rich and high-flying executives, is borrowing $120.5 million from Wall Street to expand its operations in Austin to meet pent-up demand for hangar space to park private jets.

Originally founded for the Mary Kay Inc. cosmetics company, a wholly-owned subsidiary of Million Air’s parent company plans to tap the municipal debt market in November. Proceeds from the sale will be used to roughly double the size of Million Air’s facilities at the Austin-Bergstrom International Airport, which is among the top 25 busiest in the US for business jet operations.

Some of the bond money will also go toward adding enhancements to the company’s facilities in Marathon, Florida. Raymond James is underwriting the unrated bond offering.

Continue reading.

Bloomberg Markets

By Erin Hudson and Amanda Albright

October 28, 2024

Overview

As of Oct. 17, 2024, S&P Global Ratings maintains 36 public ratings on Texas charter schools, which, along with California, top its list of states with the most rated charter schools. Texas is home to more than 900 charter schools, serving more than 375,000 students, with another 66,000 students on waitlists statewide. The Texas Legislature enacted its charter school law in 1995, and in fall 1996 the state’s first charter schools opened their doors.

Continue reading.

17 Oct, 2024

• $85 million sale helps pay for Gilder Center, cuts debt costs
• Pandemic-era deficits get whittled as attendance on upswing

The Covid-19 pandemic brought New York City’s American Museum of Natural History, home to 30 million prized artifacts, its first deficits in decades. The institution plans to tap the municipal bond market for an $85 million boost.

Proceeds from the debt sale will help the 155-year-old museum lower its interest expenses and recover costs from building the Gilder Center, a major 21st Century addition. The offering by the Trust for Cultural Resources of The City of New York is expected to price on Oct. 17, according to investor roadshow documents.

The sprawling landmark on the Upper West Side of Manhattan welcomed 5 million visitors last year, second only to the city’s Metropolitan Museum of Art among US museums. But the pandemic had hit hard, forcing the venue’s closure between March and September 2020, and cutting average annual paid attendance by 37% that year.

Continue reading.

Bloomberg Markets

By Erin Hudson and Aashna Shah

October 16, 2024

• Tax revenue from building boom helps with bigger payments
• Officials still look to cut costs, mull sale of public land

Dallas is part of America’s fastest-growing metropolitan area, a burgeoning powerhouse for finance jobs that’s in the midst of a construction boom.

And yet, as flush as it appears to be, the city of 1.3 million still faces some hard choices as it grapples with how to tackle roughly $19 billion in projected pension payments over the next 30 years, including shoring up a police and fire retirement system that ranks among the nation’s worst-funded.

It’s a dilemma almost two decades in the making that’s coming to a head now because of a state mandate to adopt and submit a plan by Nov. 1 to plug the funding gap in the first responders’ pension within 30 years.

Continue reading.

Bloomberg Markets

By Erin Hudson

October 17, 2024

North Carolina municipalities such as Asheville and Blowing Rock and communities in Tennessee may see a credit downgrade in the wake of Hurricane Helene, S&P Global Ratings said in a report on Thursday.

The company placed the rating of a dozen municipalities on CreditWatch with negative implications. All have investment-grade ratings — the city of Asheville has a AAA mark. The storm unleashed flooding across the US South late last month.

S&P said it wasn’t worried about disruptions to debt payments, but “potential long-term implications could impair credit quality.”

Continue reading.

Bloomberg Markets

By Amanda Albright

October 17, 2024

• Strategists also revised forecast for this year up by 15%
• Issuance in 2024 so far is strong rising to $409 billion

Strategists at the municipal-bond market’s biggest underwriter are forecasting a very busy year for state and local government debt bankers.

Bank of America Corp analysts led by Yingchen Li and Ian Rogow anticipate state and local governments will sell $520 billion of debt in 2025, a record sum, the group said in a research note on Friday. The strategists also revised their forecast for this year to $460 billion from $400 billion.

“Positive factors for munis remain in place,” they wrote, citing “well-controlled muni/Treasury ratios and compressing muni credit spreads.”

Continue reading.

Bloomberg Markets

By Lily Meier

October 18, 2024

• NJ, other issuers are rushing to borrow ahead of US election
• A state trust fund will invest billions to modernize transit

A New Jersey agency that finances road, bridge and mass transit infrastructure, joined the debt spree spurred by municipal issuers rushing to raise cash before the Nov. 5 US election.

The New Jersey Transportation Trust Fund Authority sold $3.2 billion in tax-exempt and taxable bonds Thursday to refinance its higher cost debt. The authority is fine-tuning its obligations as the state’s finances improve despite a turbulent year for NJ Transit riders who have been bombarded with service meltdowns and disruptions.

The deal comes amid a surge in municipal bond sales, as borrowers seek to lock in financing ahead of a potential uptick in market volatility ahead of the US presidential election. The new bonds are backed by appropriations from lawmakers and carry an A rating from Fitch Ratings and an A- rating from S&P Global Ratings Inc., one level lower than their respective grades on New Jersey’s general obligation debt.

Continue reading.

Bloomberg Markets

By Martin Z Braun and Sri Taylor

October 18, 2024

• Muni authority seeking debt for residential development
• Developers are planning to build more than 1,000 homes

In suburban Texas, a neighborhood complete with an amphitheater, dance hall and goat farm is scheduled to be erected 40 miles from Houston’s downtown — providing municipal-bond investors a window to bet on one of the fastest-growing areas of the US.

In a transaction that priced this week, a municipal authority sold high-risk, tax-exempt bonds to finance infrastructure associated with a housing development dubbed Two Step Farm. The planned community stretches more than 2,000 acres in Houston’s sprawling metropolis. The first phase will have more than 1,000 homes priced between $350,000 and $1 million, as well as parks and amenities.

The bonds are backed by future revenues generated by the project, meaning investors are wagering that the development will be built out and populated. Texas metros are seeing the most sustained population growth of all the nation’s major cities this year, according to US Census Bureau data. Houston added nearly 140,000 people to its population this year, following closely behind Dallas. San Antonio and Austin also ranked in the top 10 of the largest increases in new residents.

Continue reading.

Bloomberg Markets

By Sri Taylor

October 4, 2024

Wayne County, Mich., nearly filed for bankruptcy in 2014. It just posted its tenth budget surplus in a row.

In Brief:

• Wayne County, Mich., adopted a $2.23 billion budget last month, its tenth balanced budget in a row.
• The county was on the verge of bankruptcy in 2014, when its current county executive, Warren Evans, was elected.
• Renegotiated pension benefits and increases to property values have helped stabilize the county’s finances.

In 2013, Detroit became the biggest city in the country ever to file for bankruptcy. A year later, it looked like Wayne County, Mich., the city’s home county, was headed in the same direction.

The county had posted a string of annual budget deficits, with a structural deficit of about $52 million, according to Warren Evans, the Wayne County executive who was elected in 2014. Its pension fund was only about 45 percent funded, threatening its ability to fulfill its commitment to retiring public workers. And its bond rating had been lowered to junk status, making it more difficult to borrow money for public infrastructure and other obligations.

Continue reading.

governing.com

by Jared Brey

Oct. 10. 2024

Florida CFO Jimmy Patronis says the state will bounce back while discussing the rebuilding efforts in the wake of Hurricane Milton. He speaks on “Bloomberg The Close.”

Watch video.

Muni Moment – Bloomberg Markets: The Close

October 10th, 2024

• Debt sold to finance hospitals, senior living in storm’s path
• Muni bond impairments possible in a ‘worst-case scenario’

As Hurricane Milton barrels toward Florida threatening massive storm surges in the Tampa Bay area, roughly $30 billion of municipal debt is at risk, according to an analysis from Bloomberg Intelligence.

That includes bonds sold to finance hospitals, utility systems and senior living homes. Florida borrowers have raced to the state and local government debt market this year on the heels of a population surge that required updated infrastructure. The Bloomberg Intelligence analysis identified tax-backed and revenue-supported debt sold by localities within the most at-risk evacuation areas.

“A worst case scenario could cause impairment issues across the municipal spectrum, especially for those credits who have limited financial cushion already,” said Eric Kazatsky, senior US municipals strategist at Bloomberg Intelligence.

Continue reading.

Bloomberg Markets

By Maxwell Adler

October 9, 2024

Key Takeaways

• Hurricane Milton is the second major hurricane to make landfall in the State of Florida this year, with 51 counties placed under the pre-emptive disaster declaration that authorizes the Federal Emergency Management Agency to coordinate all disaster relief efforts and provide assistance to individuals in need.
• Florida (AAA/Stable) entered hurricane season with exceptionally high reserves totaling approximately 33.4% of operating revenue. In addition, it has a well-embedded emergency response apparatus to support short-term localized needs and enhance rebuilding efforts.
• The scale of damage remains highly uncertain from hurricanes Milton and Helene, but it could be substantial, leading to significant insured losses that are likely to place near-term pressure on the state’s statutorily created entities: Citizens Property Insurance Corp. (not rated), Florida Hurricane Catastrophe Fund (AA/Stable), and Florida Insurance Guaranty Assn. (A/Stable [FIGA]).
• We continue monitoring how these events will affect Florida’s general credit and insurance landscape, and if these entities will need to take additional measures (e.g., draws on pre-event bond proceeds, levying assessments, or new debt issuance) to help stabilize the property insurance market.

Continue reading.

10 Oct, 2024

The City of Chicago plans to sell $1.6 billion of bonds to refinance outstanding debt sold to pay for improvements at O’Hare International Airport.

The issuance will be split into four tranches, according to roadshow material posted Tuesday on MuniOS.

The General Airport Senior Lien Revenue Refunding Bonds will be divided into $515.7 million in Series 2024 C and $840.1 million in Series 2024 D. The General Airport Senior Lien Revenue Bonds will include $158.4 million in Series 2024 E and $61.3 million in Series 2024 F debt. Series C and Series E are subject to the alternative minimum tax, while Series D and Series E are exempt.

Preliminary pricing information wasn’t available. Pricing is scheduled for Oct. 17 and closing on Oct. 30, with both of those subject to change.

The Series 2024 C and 2024 D bonds will mature between 2025 and 2046. The Series 2024 E and 2024 F mature between 2025 and 2032.

Proceeds will be used to refund outstanding obligations, among other expenses. The bonds are backed by a pledge of revenue earned from airport’s operations. Most of that money comes from the rental payments, fees and charges collected under airline use and lease agreements, according to the preliminary official statement posted to MuniOS. Series E and Series F debt is also backed by a subordinate pledge of revenue collected from a passenger facility charge.

About 36.6 million people boarded flights at O’Hare in 2023, up 7.3% from the prior year, with 82% of those passengers boarding domestic flights. The total number of people boarding flights was up 9.2% this year through Aug. 31. O’Hare was the fifth-largest airport in the country for both originations and destinations and total connecting passengers.

The debt is expected to receive a rating from S&P Global Ratings. Fitch Ratings has assigned the bonds a rating of A+.

“The rating reflects the strong air trade service area, Chicago’s strategic location as a hub and the demonstrated importance of the airport to both United Airlines, Inc. and American Airlines, Inc.,” Fitch said in a report Wednesday. “The rating also reflects risks related to the very sizable capital programs with overall escalated costs estimated at $12 billion over the next decade requiring around $9 billion of bond funding, including the recent series 2024A&B bonds.”

J.P. Morgan and Jefferies are lead underwriters on the sale.

Provided by Dow Jones

Oct 9, 2024 9:31am

By Paulo Trevisani

• Deal requires Spring Hill to raise $5 million by Oct. 31
• Leadership is evaluating options to divest noncore real estate

Spring Hill College, the oldest Catholic educational institution in the southeast of the US, has struck a deal with its biggest creditor Nuveen that gives it more time to shore up its finances and overcome a default.

The Mobile, Alabama-based college entered into what’s known as a forbearance agreement with UMB Bank — the trustee for bondholders like Nuveen — after breaching a covenant, according to an Oct. 1 regulatory filing.

As part of such agreements, bondholders can agree to hold off on steps like lawsuits to give distressed borrowers more time to right their finances.

Continue reading.

Bloomberg Markets

By Amanda Albright and Nic Querolo

October 2, 2024

• Ivy League schools have borrowed $2.8 billion so far this year
• Colleges are rushing to sell bonds to spruce up campuses

Columbia University is expected to tap investors to borrow $500 million of debt, joining a boom of elite colleges that have issued in the capital markets this year.

The Ivy League university is poised to sell both tax-exempt and taxable securities this week to raise money for projects across its campus in Manhattan. A portion of the bond proceeds will be used to pay for improvements to multiple dorms, the addition of chemistry and quantum physics lab-space in academic buildings, furnishing the law school’s library and upgrades to the college’s medical center campus.

The deal marks one of the latest debt offerings from a US college, which have surged this year as the direction of interest rates stabilized and investor demand increased. Universities broadly have sold $24 billion of municipal debt so far in 2024, with sales from Ivy League schools climbing to nearly $3 billion, an increase of more than 650% from the same period a year ago, according to data compiled by Bloomberg.

Continue reading.

Bloomberg Markets

By Lily Meier

October 1, 2024

• Muni authority seeking debt for residential development
• Developers are planning to build more than 1,000 homes

In suburban Texas, a neighborhood complete with an amphitheater, dance hall and goat farm is scheduled to be erected 40 miles from Houston’s downtown — providing municipal-bond investors a window to bet on one of the fastest-growing areas of the US.

In a transaction that priced this week, a municipal authority sold high-risk, tax-exempt bonds to finance infrastructure associated with a housing development dubbed Two Step Farm. The planned community stretches more than 2,000 acres in Houston’s sprawling metropolis. Once built out, the development will have more than 1,000 homes priced between $350,000 and $1 million, as well as parks and amenities.

The bonds are backed by future revenues generated by the project, meaning investors are wagering that the development will be built out and populated. Texas metros are seeing the most sustained population growth of all the nation’s major cities this year, according to US Census Bureau data. Houston added nearly 140,000 people to its population this year, following closely behind Dallas. San Antonio and Austin also ranked in the top 10 of the largest increases in new residents.

Continue reading.

Bloomberg Markets

By Sri Taylor

October 4, 2024

Key Takeaways

• Rising costs and affordability risks will be increasingly meaningful to municipal utility credit quality in California, particularly as they adapt to more extreme weather patterns, bolster supply resiliency, and invest in storage, which we expect will raise debt levels but reduce operating risks.
• California utilities’ capital plans and needs far exceed those of its national peers, given their outsized exposure to water contaminants, strict wastewater discharge requirements, and substantial renewal and replacement costs.
• Rating downgrades in California outpaced upgrades in 2024, a trend we expect will continue through 2025, consistent with our negative sector outlook.

Continue reading.

3 Oct, 2024

Five new indices to track performance of securities of obligors exposed to climate risk, uses ICE Climate Risk Scores

Intercontinental Exchange, a leading global provider of technology and data, announced that it has launched a new suite of climate risk municipal indices, using the ICE Climate Risk Score, aimed at tracking the performance of securities selected based on exposure to acute climate risks.

The new suite of climate risk municipal indices is a collaboration between ICE’s Climate and Index teams. The indices, using ICE Climate Risk data, track the performance of securities issued by obligors with different projected vulnerability to a range of climate risks, including hurricanes, wildfires and floods.

The new index family includes:

• ICE US High Physical Climate Risk Municipal Index (MUNIHICR)
• ICE US Low Physical Climate Risk Municipal Index (MUNILOCR)
• ICE US High Physical Wildfire Risk Municipal Index (MUNIWFCR
• ICE US High Physical Flood Risk Municipal Index (MUNIFLCR)
• ICE US High Physical Hurricane Risk Municipal Index (MUNIHRCR)

“ICE indices have helped market participants capture exposure to some of the most dynamic trends that shape the global economy, and climate risk has increasingly become an important factor in the investment decision-making process,” said Preston Peacock, Head of ICE Data Indices, administrator of the new indices. “This new suite of climate indices will be an effective tool to track advancements in the repricing of climate risk in bond markets for researchers and investors.”

The ICE Climate Risk Score serves as a singular assessment, ranging from 0.0 to 5.0, amalgamating all the ICE Sustainable Finance Platform’s climate hazard models. It provides a comprehensive, relative measure of estimated total property risk stemming from physical climate hazards for a specific location, or a collection of locations related to the obligor.

“ICE research shows that, despite accelerating economic damages from severe weather, physical climate risk is not yet being priced into municipal bonds,” said Evan Kodra, Head of Climate R&D at ICE. “That lack of pricing signal could obscure the true risk and perpetuate complacency around climate in the market. We are pleased to assist in the launch of new indices that can help address this, giving investors a consistent pulse on the climate-yield relationship and a benchmark for managing portfolio risk.”

These new climate risk municipal indices join ICE’s fixed income index offering, which includes approximately 6,000 standard indices tracking more than $100 trillion in debt spanning the global bond markets, with debt represented across 51 currencies.

• The cash-strapped MBTA is breaking ground on repairs, projects
• The South Coast Rail will boost access to Boston for residents

The commonwealth of Massachusetts is seeking $490.7 million in municipal debt to help fund improvements for its commuter rail and other transportation projects throughout the state.

The deal, according to preliminary bond documents, is comprised of three series: $150 million revenue bond series to fund the rail enhancement program, $125 million sustainability bonds and $215.7 million in revenue refunding bonds.

The sustainability bonds will finance construction for the Massachusetts Bay Transportation Authority’s South Coast Rail Project, which will restore commuter rail service between Boston and southeastern Massachusetts — a region that historically hasn’t had commuter rail access to the heart of the city.

Continue reading.

Bloomberg Markets

By Sri Taylor

September 25, 2024

The ‘AA+’ rating on the Virginia Commonwealth Transportation Board’s Federal Transportation Grant Anticipation Revenue Notes (GARVEES), one notch below the commonwealth’s ‘AAA’ Long-Term Issuer Default Rating (IDR), reflects the appropriation commitment on the part of Virginia’s general assembly to pay debt service using all legally available funds, including funds derived from the commonwealth’s general fund, should this be necessary. The one notch rating differential reflects the slightly elevated risk associated with non-appropriation. Virginia’s ‘AAA’ Long-Term IDR and GO ratings reflect the commonwealth’s substantial fiscal resources, careful management of fiscal operations and debt, and exceptional gap-closing capacity. The commonwealth’s strong economic profile provides a stable revenue base and solid growth prospects for tax revenues. Virginia also maintains a low long-term liability burden relative to its economic resource base.

Access Report

Thu 26 Sep, 2024

The ‘AA-‘ rating on the Commonwealth of Kentucky’s appropriation-backed debt, including the project no. 131 bonds, is set one notch below the commonwealth’s ‘AA’ Issuer Default Rating (IDR) based on debt service for lease payments that are subject to annual appropriation. The ‘AA–’ rating reflects a slightly elevated risk of nonrepayment given the appropriation pledge.

Access Report

Fri 27 Sep, 2024

Fitch Ratings-New York/Chicago-27 September 2024: Hurricane Helene, while resulting in the tragic loss of life and significant economic losses in affected areas, is not likely to affect credit ratings for property/casualty (P/C) (re)insurers, Citizens Property Insurance (Citizens; AA) or the Florida Hurricane Catastrophe Fund (FHCF; AA), Fitch Ratings says. This assessment is based on our initial estimate of an insured loss range from $5 billion to $10 billion, with anticipated individual insured losses that should remain within ratings sensitivities, ample capital levels and insurers’ ability to increase premium rates.

Hurricane Helene, which made landfall in the sparsely populated Big Bend region of Florida as a Category 4 hurricane and moved through the southeast U.S. as a tropical storm, is expected to generate considerable economic and insured losses. Florida will be meaningfully affected by heavy rainfall, storm surge, flooding and high winds. However, Georgia’s losses may exceed Florida’s due to strong sustained winds across highly populated areas. The Carolinas, Tennessee and Kentucky are also likely to experience losses.

Standard homeowners’ insurance does not typically cover flood damage. Private market flood insurance has grown, but remains less than 1% of industry direct premiums written, with the relatively small exposure limiting industrywide potential for loss. Fewer than 15% of homeowners buying insurance purchase primary flood insurance, with even lower take-up rates away from the coasts with less historical flooding. However, mortgage lenders require flood insurance if a homeowner has a federally backed mortgage and lives in a Federal Emergency Management Agency (FEMA) high-risk flood zone or if they have received prior FEMA compensation for flood damage.

Continue reading.

• About 100 retail investors purchased the stadium bonds
• High-tax states tend to have stronger muni retail interest

Buffalo Bills fans, fresh off a blowout win against the Jacksonville Jaguars, just scored another victory — this time in the municipal bond market.

Roughly 100 retail buyers placed orders for debt sold this week which will help finance the construction of a new $1.7 billion stadium for the National Football League team in Orchard Park, New York. Fans in the highest-tax bracket would need to find a taxable security yielding about 7% to compete with the payout on the offering’s 20-year bond. Treasuries would need to offer a yield of 5.83%.

That’s because the debt is exempt from state and federal income taxes, a valuable haven in a state with one of the highest levies in the US.

Continue reading.

Bloomberg Markets

By Maxwell Adler and Amanda Albright

September 25, 2024

• Refinancing deal would generate savings to help plug deficit
• Measure is sitting with city council’s finance committee

Chicago Mayor Brandon Johnson is seeking approval to sell as much as $1.5 billion of bonds to refinance old debt to help plug this year’s budget deficit.

Johnson filed the proposed ordinance last week, and it now sits with the city council’s finance committee. If passed by the committee, which meets on Oct. 2, the measure then needs approval from the full council.

The deal would include bonds sold as part of an entity set up in 2017 to issue debt backed by sales levies. They carry a higher rating than Chicago’s general obligation debt that is weighed down by factors including unfunded pension liabilities and back-to-back budget deficits.

Continue reading.

Bloomberg Markets

By Shruti Singh

September 25, 2024

NEW YORK (S&P Global Ratings) Sept. 25, 2024–S&P Global Ratings today assigned its short-term ‘A-1′ rating to BlackRock California Municipal Income Trust’s series W-7 variable-rate demand preferred (VRDP) shares, which have a liquidation preference of $100,000 per share.

The short-term rating addresses the expectation of timely repayment of the shares’ liquidation preference in the event of an optional tender, mandatory tender, or mandatory purchase, and reflects the short-term rating on the liquidity provider, Barclays Bank PLC (A+/Stable/A-1). If the short-term rating on the liquidity provider were to change, we would expect to make a corresponding change to our rating on the series of VRDP shares.

Continue reading.

Critical water system upgrades are in the works in dozens of Michigan communities thanks to $1.05 billion in low-interest loans from the state revolving funds. The Michigan Department of Environment, Great Lakes, and Energy (EGLE) issued financing agreements to 72 projects in the Drinking Water and Clean Water state revolving funds across the state in fiscal year 2024.

These projects ensure safe drinking water is available for residents and reduce the risk of contaminants entering surface water and ground water. Funds for these low interest financing programs come from the Drinking Water State Revolving Fund and the Clean Water State Revolving Fund – mixes of federal and state dollars dedicated to financing community water infrastructure projects.

Requests for loan dollars were overwhelming, as cities, villages, and towns across Michigan struggle to maintain deteriorating water infrastructure. Properly functioning water systems are crucial to Michiganders’ quality of life – from the water flowing from taps to the numerous lakes and streams that provide amazing recreational opportunities and flood control. Infrastructure is often taken for granted until it fails, impacting the well-being of people and the environment.

State Revolving Fund (SRF) interest rates are well below market rate and occasionally provide the opportunity for communities to secure principal forgiveness – a portion of the loan that does not have to be repaid. In fiscal year 2024, $147.3 million in loan dollars were forgiven for communities with financial hardships.

Demand has outpaced available funds, however, with community requests for project financing totaling nearly three times available funding.

“These long-term, low-interest loans help protect public health and the environment, reduce pressure on communities to raise funds quickly for essential upgrades, and minimize the need for large user rate increases,” said Paul McDonald, EGLE’s chief financial officer. “We’ve seen historic demand for assistance from the state revolving funds. While we’ve been unable to meet the entire demand, it is gratifying to see projects come to life in communities large and small.”

“The state revolving funds have provided financing for communities undertaking water infrastructure improvements over the past 30 plus years,” said Kelly Green, administrator of EGLE’s SRF programs. “It’s a proven program with long term financing options at very low interest rates that help communities and infrastructure users meet their needs and set the table for long-term success.”

Detailed information on the low-interest loans issued to communities this year can be found by accessing the SRF visual dashboard. The dashboard also contains information on every loan issued under the SRF programs.

Those interested in hearing more about EGLE grants and loans may subscribe to “EGLE grant and loan opportunities” communications and others at EGLE’s email update sign-up webpage.

Descriptions of funding sources

Drinking Water State Revolving Fund (DWSRF): Low-interest loan program to help public water systems finance the costs of replacement and repair of drinking water infrastructure to protect public health and achieve or maintain compliance with federal Safe Drinking Water Act requirements. As water systems repay their loans, the repayments and interest flow back into the DWSRF to support new loans.

Clean Water State Revolving Fund (CWSRF): Used by local municipalities to finance construction of water pollution control projects. These projects include wastewater treatment plant upgrades and expansions, combined or sanitary sewer overflow abatement, new sewers designed to reduce existing sources of pollution, and other publicly owned wastewater treatment efforts that improve water quality. The CWSRF can also finance stormwater infrastructure projects to reduce nonpoint sources of water pollution caused by runoff to lakes, streams, and wetlands.

michigan.gov

September 25, 2024

S&P Global Ratings assesses City of New York’s General Obligation Bonds, 2025 Series D Taxable Social Bonds, Subseries D-1 as aligned with Social Bond Principles, ICMA, 2023. The City, with a population of 8.3 million (July 2023 estimate), has the highest metropolitan area GDP of all U.S. metro areas and is a global hub for finance, leisure, and business tourism, universities, health care providers, and–increasingly–technology companies. The City established the HPD in 1978 to handle the development and maintenance of its affordable housing.

Download

• Company made up 8.4% of Nuveen’s largest junk-muni fund
• Vistra will become the sole owner of its power subsidiary

The municipal-bond market’s largest high-yield fund is poised to offload its biggest position — equity shares of a power company called Vistra Vision LLC.

Nuveen LLC has reached an agreement to sell its 11% stake in Vistra Vision to Vistra Corp., in a deal expected to close in December, according to statement late Wednesday. The transaction will total about $3.25 billion, including a share from Avenue Capital Management.

After the sale is completed, Texas-based Vistra will become the sole owner of its subsidiary Vistra Vision and Nuveen will receive payments it can reinvest into its municipal-bond funds. Vistra is a developer and owner of power plants and the best performing stock in the S&P 500 Index this year.

Continue reading.

Bloomberg Markets

By Danielle Moran

September 19, 2024

The loan portfolio is large, with 307 obligors, but concentrated, with the top 10 obligors accounting for about 59% of the portfolio total. The top two obligors, the city of Wichita and Johnson County, make up 23.1% and 9.5% of the portfolio, respectively. Acting in conjunction with the Kansas Department of Health and Environment, the authority provides below-market financing to municipalities in the state of Kansas for water supply and wastewater projects. Bond proceeds are combined with recycled funds from prior loans, federal grants and an EPA requirement for the state to provide matching funds for such projects. In aggregate, the top 10 obligors represent about 59% of the pool, generally in line with Fitch’s ‘AAA’ median level of 57%. The city of Wichita’s water system (water and sewer revenue bonds not rated by Fitch but assessed to be of very strong credit quality) is the largest obligor, approximating 23% of the total pool. Johnson County (GO bonds rated ‘AAA’ by Fitch) and the city of Salina (bonds not rated by Fitch but assessed to be of very strong quality) are the next two largest participants, accounting for 9.5% and 4.4% of the pool, respectively.

Access Report

Wed 18 Sep, 2024

The ‘AAA’ rating reflects the ability of the Indiana Finance Authority’s (IFA, or the authority) clean water (CW) and drinking water (DW) State Revolving Fund (SRF) bond program’s (the program) financial structure to absorb hypothetical pool defaults in excess of Fitch Ratings’ ‘AAA’ stress scenario without causing an interruption in bond payments. Aggregate pool credit risk is measured using Fitch’s Portfolio Stress Model (PSM), and the strength of the program’s financial structure is measured using Fitch’s Cash Flow Model.

Access Report

Wed 18 Sep, 2024

The state of California’s ‘AA’ Issuer Default Rating (IDR) reflects its large and diverse economy, which supports strong, albeit cyclical, revenue growth prospects, a solid ability to manage expenses through the economic cycle and moderately low long-term liabilities. Strong fiscal management — institutionalized across administrations and demonstrated through the buildup of the budgetary stabilization account (BSA) and elimination of past budgetary borrowing — allows the state to withstand economic and revenue cyclicality.

Access Report

Thu 19 Sep, 2024

• Hires come during broad talent shift in municipal-bond market
• Scranton joins as head of surface transportation deals

Loop Capital Markets has hired three public finance bankers as the Chicago-based investment bank expands in the Northeast amid a rebound in municipal-bond sales this year.

Jaimie Scranton joined Loop in Boston this month as a managing director and head of surface transportation deals, according to a statement from the bank. She most recently served as a senior banker at Barclays Plc.

Doug Adams joined in July to open a new office for Loop in Philadelphia. As a vice president, he will focus on higher education and transportation. He previously worked at Echo Financial Products, an advisory firm. Christopher Dinno joined Loop as an investment banking associate last month in New York. He previously worked for Ramirez & Co.

Representatives of Barclays, Ramirez and Echo didn’t respond to emails seeking comment about the departures.

“We are looking to grow nationally, emphasizing Texas and the Northeast,” Bo Daniels, Loop’s head of public finance, said in the statement. “This new group of bankers further underscores that strategy, especially in the Northeast. The market is strong right now, and we expect that to continue into next year.”

The hires come during a broader talent shift in the market after Citigroup Inc. and UBS Group AG largely exited the muni market. Loop is among a series of smaller banks now hiring from other competitors still active in the market, after recruiting earlier this year from the exiting firms.

In March, Loop announced it had hired three former Citigroup bankers and one from UBS to expand in Boston, Houston and San Antonio, according to a statement.

In Thursday’s statement, Loop Chairman and Chief Executive Officer Jim Reynolds said the firm sees “tremendous growth opportunities” in the market.

Bloomberg Industries

By Shruti Singh

September 19, 2024

Texas’ ‘AAA’ Issuer Default Rating (IDR) and general obligation (GO) bond rating reflect its growth-oriented economy and the ample fiscal flexibility provided both by its conservative approach to financial operations and the maintenance of substantial reserves, including in its budgetary reserve, the economic stabilization fund (ESF).

Access Report

Fri 20 Sep, 2024

ICE’s rules-based, transaction-driven approach provides a transparent representation of municipal market movement.

The complex and fragmented municipal bond market – comprised of around one million securities and 50,000-plus issuers – has long been a challenge to price. Data can be scarce, dated, and not standardized. ICE has been working to address this challenge over the past few years, drawing on our expertise in evaluations and depth of our pricing data. Today, our expanded range of Municipal Coupon & Callability Curves cover four ratings buckets (AAA, AA, A, BBB) three coupon rates (3%, 4%, 5%) and nine call structures (from 10 to 2 years to first call). The curves are mid yield, yield to worst (YTW) curves, with a methodology that is rules-based, transaction-driven, and updates based on certain round lot trades reported to the MSRB’s Real-time Transaction Reporting System (RTRS).

To appreciate what distinguishes our methodology, it’s important to understand how municipal bonds are priced for trading in the secondary market, where a market participant typically refers to recent trades for the price paid in conjunction with other factors such as the size of the trade and spread to the municipal bond (or “muni”) reference curve. The typical muni reference curve is a AAA 5% coupon with a 10-year par call which has traditionally been the most common new issuance borrowing structure of municipalities. If no recent trades are available or market conditions have changed so the last trade price is no longer relevant, other sources are consulted – such as trades involving bonds with similar characteristics. That’s where yield curves have a part to play in collating market color. Many participants are turning to ICE’s AAA Municipal Yield Curve as the key reference curve in both primary and secondary markets due to its rules-based, transaction-driven framework. This provides a more transparent representation of municipal market movement than traditional methods of curve construction, which typically use a consensus approach.

Following the launch of ICE’s AAA Municipal Yield Curve, its live pricing could be applied to as much as 80% of the one million active municipal bond securities universe. Yet ICE’s municipal bond team recognised its limitations: not every bond has a 5% ten-year par call structure throughout its life. Using the AAA curve as a base, they built lower-level coupon and call curves from observed trades that met certain criteria. As criteria-acceptable trades are applied to the model, the curves are updated to reflect changes in current market conditions. This means the impact of any curve movements can be applied to a large swathe of bonds quickly- a more effective way to pass through market color to a larger set of comparable bonds. A survey-based approach would struggle to reflect market conditions in this manner.

The spreads from ICE’s expanded curve set can update several times a day – but no less frequently than daily – and ICE’s team aims to track and reflect the institutional mid yield of each maturity point of the curves. Trades fitting the selection criteria are each associated with a curve and its interpolated tenor yield. Several checks are included to maintain curve consistency across rating, coupon, call and curve shape, while a proprietary optimizer solves for the best suite of curves that minimizes total trade to curve spread differences. The curves are fitted through the middle of the selected trades for a particular curve, so each curve represents the average, or mean credit. ICE’s evaluators are also on hand to provide oversight on curve behavior. Importantly, these curves are used daily to apply intraday and end-of-day market moves to most of the investment grade municipal bond universe evaluated by ICE. Intraday updates to the curves support ICE’s Continuous Evaluated Pricing™ while the end-of-day curves are used to support ICE end-of-day municipal evaluation.

The development of ICE’s expanded municipal curve offering was well underway when the most recent rate hike cycle began in March 2022. These rate hikes – unprecedented in their pace and magnitude – contributed to a market sell-off amid fears of a potential recession. This saw a growing number of outstanding municipal bonds fall into de minimis territory, with ICE estimating a third of tax-exempt munis were affected at the height of the sell-off. In addition, December 2022 saw the ICE Municipal AAA yield curve invert for the first time in history; a dynamic that persists with the two-to-10-year segment of the municipal yield curve. These factors – a drastic rate hike cycle, muni yield curve inversion, and thousands of bonds breaching de minimis – upended recent pricing relationships, underscoring the need for a broader set of municipal bond curves for use in evaluated pricing. These curves can be a valuable input for firms looking to partially or fully automate their trading on municipal securities. While ICE’s evaluations take in and apply more market data than just the curves, the curve suite is now one of the main drivers of evaluation movement.

By Patrick Smith, Senior Director, Head of Municipal Evaluations, ICE

By fidesk -September 17, 2024568

NEW YORK, Sept. 17, 2024 (GLOBE NEWSWIRE) — SOLVE, the leading provider of pre-trade data and predictive pricing for fixed income securities markets, is debuting SOLVE Px™, the firm’s proprietary, AI-driven predictive price data for the municipal bond market. SOLVE Px will provide SOLVE’s buy and sell-side customers with unprecedented visibility into “next-trade” pricing data on over 900,000 municipal bonds.

SOLVE’s platforms–including SOLVE Quotes™, which provide price transparency data on over 20 million daily quotes and more than 1,250,000 securities across different asset classes–are already being used by investment, trading, and valuation experts across the fixed income market. SOLVE Px is the newest addition to a slate of products designed to give the fixed income investment ecosystem access to insights that enable better trading decisions, including for municipal bonds that are infrequently quoted and traded.

“One of the unique challenges in the municipal bond market is the sheer number of outstanding CUSIPs and the lack of pricing transparency on the vast majority of them. This makes valuing specific munis very time-consuming and market participants do not have the confidence that they have all the relevant information to make sound relative value decisions,” said SOLVE founder and CEO Eugene Grinberg. “By tapping into our unparalleled quotes data and leveraging AI’s ability to see in many dimensions, SOLVE Px lets front-office municipal bond professionals price munis with confidence and identify investment opportunities.”

SOLVE Px leverages data from the extensive SOLVE Quotes database and is based on an AI Prediction Model powered by nearly 300 feature inputs. This Prediction Model is re-trained daily to adjust dynamically to constantly evolving market conditions. SOLVE Px incorporates real-time Quotes, trades, and reference data to produce predictive prices in real time.

“We leveraged our deep muni market relationships as we developed our predictive pricing platform, sought industry feedback, and performed rigorous back-testing to ensure Px meets the high standards of our diverse client base. Our output, Px, is a unique platform that delivers predictive prices for the buy and sell sides and at the trade size that makes sense to our clients,” said Gregg Bienstock, Group Head of Municipal Markets. “This is just the beginning as we move to expand this offering with tools for relative value and as we move to other asset classes.”

SOLVE Px has proven highly accurate over its year-long testing period and will bring many competitive advantages to SOLVE’s customers.

Key Benefits Include:

• Unmatched predictive accuracy – SOLVE Px is a highly accurate prediction model that enables sell-side and buy-side investors to execute trades with better and more informed data. SOLVE Px’s median absolute yield error of just 5-6 bps significantly improves trading outcomes.
• Relative Value – SOLVE Px, by accurately pricing virtually every security in the municipal asset class, is uniquely suited for various Relative Value exercises, including rich/cheap bond vs. bond, bond vs. cohort, or cohort vs. cohort analyses and visualizations.
• Breadth of coverage – Access to the largest suite of price transparency-driven data and analytics – Including Quotes that come from parsing a client’s own messages with AI, Quotes that come from other contributing clients, and tools to identify comparisons and generate representative pricing.

SOLVE Px is available now and predicts the next trade price for over 900,000 fixed coupon bonds, representing 99% of all fixed coupon bonds and over 93% of the entire universe of live municipal bonds.

To learn more about SOLVE Px, please visit https://solvefixedincome.com/solve-px.

About SOLVE
SOLVE is the leading market data platform provider for fixed-income securities, trusted by sophisticated buy-side and sell-side firms worldwide. Founded in 2011, SOLVE leverages its proprietary Deep Market Insight™ to offer unparalleled transparency into markets, reduce risk, and save hundreds of hours across front-office workflows. With the largest real-time datasets for Securitized Products, Municipal Bonds, Corporate Bonds, Syndicated Bank Loans, Convertible Bonds, CDS, and Private Credit, SOLVE empowers clients to transform the way they bring new securities to market, trade on secondary markets, and value highly illiquid securities. Headquartered in New York, with offices across the globe, SOLVE is the definitive source for market pricing in fixed-income markets. For more information, visit https://solvefixedincome.com.

*SOLVE Px does not constitute Investment Advice and does not seek to value any security and does not purport to meet the objectives or needs of specific individuals or accounts.*

Media Contact:

Jake Katz
[email protected]

Clean Power Alliance on Sept. 12 said it has issued its third municipal non-recourse Clean Energy Project Revenue Bond through the California Community Choice Financing Authority.

The $1.524 billion bond issuance is expected to reduce CPA’s renewable energy costs by an estimated $93 million over the initial eight-year period of the bond, or an average of $11.6 million annually.

The savings from this prepay transaction are locked in until 2032, at which time the bond will be repriced.

Founded in 2017, Clean Power Alliance is the locally operated not-for-profit electricity provider for 33 cities across Los Angeles County and Ventura County, as well as the unincorporated areas of both counties.

The bond received an investment-grade A1 rating from Moody’s and a ‘Green Bonds’ designation by Kestrel Verifiers.

CPA issued its first two Clean Energy Project Revenue bonds in February 2023 and April 2023, respectively. The three bond issuances are expected to generate total annual savings of approximately $25.3 million.

Energy prepayment bonds are long-term financial transactions available to public agencies like CPA to provide power procurement cost savings.

A Clean Energy Project Revenue Bond is a form of wholesale electricity prepayment that requires three key parties: a tax-exempt public electricity retailer (CPA in this transaction), a taxable energy supplier (J Aron & Company, LLC in this transaction), and a municipal bond issuer (CCCFA in this transaction)

The three parties then enter into long-term power supply agreements for zero-emission clean electricity sources such as solar, wind, geothermal, and hydropower. The municipal bond issuer issues tax-exempt bonds (underwritten by Goldman Sachs in this transaction) to fund a prepayment of energy that will be delivered over 30 years.

The energy supplier provides a discount to the tax-exempt public electricity retailer in exchange for the prepayment of power purchases funded by the bond proceeds.

CPA has assigned three solar-plus-storage power purchase agreements to this prepay transaction. The bond will be utilized to prepay the purchase of a combined capacity of 854.5 megawatts of renewable energy.

For the bond, CPA was advised by municipal financial advisor Municipal Capital Markets Group and by the law firm Chapman & Cutler.

publicpower.org

by Paul Ciampoli

September 12, 2024

Passengers at Portland international Airport are coming and going through a new terminal, part of a broader renovation that also includes enhancements to parking and rental-car areas.

Orrick has served as bond and/or disclosure counsel for the Port of Portland in five financings totaling $2.2 billion since 2019. Those financings provided funding for the renovation work, including a $589.9 million financing that closed around the same time as the new terminal opened August 14.

THE COMPANIES
The Port of Portland operates Portland International Airport and two other airports as well as four marine terminals and five business parks.

With hundreds of employees, the Port is an economic engine for transforming the region into a place where everyone is welcome, empowered, and connected to the opportunity to find a good job or grow their business.

THE IMPACT
Built and designed by more than 30,000 local craftspeople, the terminal offers more places to eat, drink and shop. It has “double the capacity but keeps the heart and character of the airport that consistently ranks among travelers’ favorites,” the Port said.

“Our focus throughout this entire project was: How do we reflect the pride and love we all have for the region in the new PDX?” said Curtis Robinhold, executive director for the Port of Portland. “It was a lot of local love for the Pacific Northwest that made it all happen.”

The terminal includes new airline check-in areas, a public space with stadium seating and a mezzanine restaurant, a streamlined security process and 11 local shops and restaurants.

Work from now until 2026 will add more shops and restaurants, more escalators and elevators to the arrivals level, shorter walks to and from airline gates and new airline VIP lounges, among other things.

THE TEAM
Greg Blonde and Christine Reynolds led the Orrick teams that have advised the Port of Portland on five financings since 2019. The teams also included John Stanley, Mayling Leong, Leslie Conrad Krusen IV, Alexandra Bartos-O’Neill and Angie Gardner.

September.09.2024

The State of Illinois’ ‘A–’ Long-Term IDR reflects solid operating performance that nonetheless remains weaker than that of most other states. Illinois has a long record of structural imbalance primarily related to pension underfunding, offset by continued progress toward more sustainable budgeting practices. The rating also reflects the state’s elevated long-term liability position and resulting spending pressure. Illinois’ deep and diverse economy is growing slowly, but still provides a strong fundamental context for its credit profile.

Access Report

Thu 12 Sep, 2024

The ‘AA+’ rating on the series 2024A bonds reflects strong growth prospects for state sales tax collections, the source of revenues pledged to the bonds, and the resilience of the bond structure. Available sales tax collections, net of distributions that come ahead of the School Modernization Facilities (SMF) Fund distribution, provide strong debt service coverage, even when taking into account maximum future issuance.

Access Report

Fri 13 Sep, 2024

ORLANDO, Fla. – Sept. 9, 2024 – Global law firm Greenberg Traurig, P.A. represented bond investors in the issuance of Electric Vehicle Charging Infrastructure Grant Anticipation Notes Series 2024 and Series 2024-B by the National Finance Authority, totaling $50,400,000. The proceeds from these bonds have been loaned to Francis Energy Charging, LLC to finance the construction of an electric vehicle charging station network. This project will be reimbursed by funds from the federal National Electric Vehicle Infrastructure program.

The Greenberg Traurig team was led by Public Finance & Infrastructure Shareholder Carl McCarthy with assistance from Associate Violeta Gonzales.

About Greenberg Traurig’s Public Finance & Infrastructure Practice: Greenberg Traurig, LLP has a national public finance practice that consistently ranks among the top bond, disclosure, and underwriter’s counsel firms according to The Bond Buyer’s nationwide and statewide rankings. Greenberg Traurig LLP’s Public Finance & Infrastructure Practice has been serving the needs of state and local issuers, underwriters, credit providers, bondholders, and conduit borrowers throughout the United States for more than forty years in virtually every area of public finance. The firm currently has 35 attorneys in the Public Finance & Infrastructure Practice in its Arizona, Colorado, Florida, Georgia, Illinois, Massachusetts, New York, Pennsylvania, Texas, and Washington, D.C. offices.’’

About Greenberg Traurig: Greenberg Traurig, LLP has more than 2750 attorneys in 47 locations in the United States, Europe and the Middle East, Latin America, and Asia. The firm is a 2022 BTI “Highly Recommended Law Firm” for superior client service and is consistently among the top firms on the Am Law Global 100 and NLJ 500. Greenberg Traurig is Mansfield Rule 6.0 Certified Plus by The Diversity Lab. The firm is recognized for powering its U.S. offices with 100% renewable energy as certified by the Center for Resource Solutions Green-e® Energy program and is a member of the U.S. EPA’s Green Power Partnership Program. The firm is known for its philanthropic giving, innovation, diversity, and pro bono. Web: www.gtlaw.com.

• Andover plans to use proceeds to refinance existing debt
• School’s endowment was valued at $1.4 billion in June

Phillips Academy Andover, a top prep school that counts two former US presidents among its alumni, is tapping the municipal bond market to pay off existing debt.

Andover is slated to issue $53.7 million of bonds through the Massachusetts Development Finance Agency on Thursday, preliminary documents show. Proceeds of the offering will be used for refinancing and terminating an interest-rate swap, as well as paying for issuance costs, according to the prospectus.

The alma mater of both Presidents George H. W. Bush and George W. Bush, Andover joins a smattering of private schools that have come to the state and local debt market of late. Earlier this summer, St. Ignatius College Preparatory sold muni bonds in California to revamp its campus, while Massachusetts’ the Wheeler School raised debt in April.

Continue reading.

Bloomberg Markets

By Erin Hudson

September 9, 2024

• Borrower targets tax-exempt muni sale for Oct. 8 at earliest
• The airport is in the midst of a large renovation project

The developer behind a major renovation of John F. Kennedy International Airport is preparing a $1.5 billion municipal bond sale next month.

JFK Millennium Partners is considering tapping the market with a tax-exempt issue to refinance outstanding obligations issued in 2022, according to a regulatory filing posted this week to the Municipal Securities Rulemaking Board’s EMMA website. That debt includes bank loans and an initial series of bonds issued with the Royal Bank of Canada.

The group behind the public-private partnership is in the process of developing the airport’s new Terminal 6, which is expected to be 1.2 million square feet and cost $4.2 billion. The first gates at the terminal are expected to open in 2026 with the project finishing two years later.

Construction began on the terminal in February 2023. The new terminal, which is set to have food offerings like Italian-sandwich shop Alidoro and Momofuku founder David Chang’s Fuku, is part of a larger $19 billion overhaul of the airport in Queens. The new terminal will also include features like touchless check-in technology and a taxi plaza.

The municipal bonds would be sold though the New York Transportation Development Corporation and could be priced as early as Oct. 8. The sale would be underwritten by a group led by Goldman Sachs and Siebert Williams Shank, according to the filing.

Bloomberg Markets

By Lily Meier and Shruti Singh

September 12, 2024

• University of the Arts bond trustee sought accelerated payment
• School abruptly closed its doors in June, shocking students

The University of the Arts, a private college in Philadelphia that abruptly closed its doors in June, filed bankruptcy Friday, two weeks after it faced a demand by its bondholders for immediate repayment of more than $50 million in debt.

The school listed assets and liabilities of $50 million to $100 million, in a petition for Chapter 7 liquidation filed in the US Bankruptcy Court in Delaware. The school’s board of trustees held a special meeting on Sept. 5 to approve the filing. It was subsequently approved by 17 of 18 board members.

The closing of the school came as a shock to students, parents and staff who were only given a week’s notice. The action spurred protests at its campus as well as multiple legal actions.

Continue reading.

Bloomberg Markets

By Martin Z Braun

September 13, 2024

Adventist Health, a faith-based nonprofit health system across the West Coast and Hawaii, has entered into a 30-year energy-as-a-service concession and lease with Bernhard.

Orrick advised Adventist and served as bond counsel. The project involves a $457 million tax-exempt project financing and investment in energy-related infrastructure systemwide.

Bernhard will support Adventist as a long-term developer to optimally and most efficiently operate and maintain the new and existing energy assets, including renewable energy assets and central utility plants.

The guaranteed utility cost savings as a result of the improvements are structured to offset the design, construction, financing and operations and maintenance costs for the project. This tax-exempt financing structure was novel in that it used a special purpose not-for-profit entity formed by the broader Adventist organization to support this transaction. It also included multiple bond issuers to finance improvements in three different states.

Continue reading.

September.03.2024

California’s high-yield municipal bonds, intended to fund housing for essential workers like police officers and teachers, are under financial stress. The state issued between $8 billion and $10 billion in speculative municipal bonds to convert existing apartments into affordable housing for middle-income families, but these projects are now struggling due to rising interest rates and declining occupancy.

Local agencies often borrowed beyond the purchase price, assuming high occupancy would cover expenses, but that assumption has proven risky as the economic landscape shifts. The bonds, many of which were sold when interest rates were historically low, now face significant challenges as financial conditions tighten.

Experts are increasingly doubtful about the sustainability of this workforce-housing model, which has not yet been tested across different economic cycles.

Nasdaq

Written by [email protected]

August 28, 2024

The ‘AA+’ ratings reflect MWD’s very low leverage, measured as net adjusted debt to adjusted funds available for debt service (FADS), within the context of the district’s very strong revenue defensibility and operating risk profiles, both assessed at ‘aa’. Between fiscal 2018 (FYE June 30) and 2022, leverage, measured as net adjusted debt to adjusted FADS, ranged between 5.4x and 6.5x. However, lower demand due to drought conservation measures weakened FADS and overall performance in fiscal 2023 and drove leverage up to 8.2x. Based on estimated actual performance in fiscal 2024, leverage could increase further, potentially approaching 12.0x, largely the result of sustained lower demand as purchasers utilized more of their respective local supplies rather than purchasing from MWD. Positively, action taken by MWD’s board of directors (the board) in adopting its current biennial 2025 and 2026 budget increased both water rates and property tax rates. The increases are expected to drive improved margins and performance beginning in fiscal 2025, which should bring performance and leverage back in line with the current rating. Fitch’s Analytical Stress Test (FAST) also points to declining leverage thereafter, supportive of the current rating and Outlook.

Access Report

Thu 05 Sep, 2024 – 9:22 AM ET

• American Sustainable Business Council sues state officials
• Lawsuit argues the Texas legislation is unconstitutional

The American Sustainable Business Council sued Texas officials in an effort to block a law that restricts state investments with certain financial firms because of their energy policies.

The lawsuit filed Thursday in federal court in Austin, argues the 2021 state law is unconstitutional and it seeks to “coerce and punish” businesses seeking to reduce reliance on fossil fuels.

The group — a nonprofit that represents thousands of businesses and advocates for environmentally-friendly policies — sued Texas Comptroller Glenn Hegar and the state’s Attorney General Ken Paxton, who have been vocal supporters of the measure. In the lawsuit, it argued that the law overstepped and went against the First Amendment.

Continue reading.

Bloomberg Markets

By Amanda Albright and Madlin Mekelburg

August 29, 2024

The ‘AA’ bond ratings along with the ‘aa’ Standalone Credit Profile (SCP) reflect SAWS’ combined water and sewer system’s (the system) very strong revenue defensibility assessment of ‘aa’, supported by its fundamental role as the sole water and sewer service provider to a broad service area with very favorable demographic trends. Its very strong operating risk assessment of ‘aa’ incorporates ample and diversified water supplies, a very low operating cost burden and strong levels of capital investment. The system’s leverage, measured as net adjusted debt to adjusted funds available for debt service (FADS), measured 6.0x in fiscal 2023 (FYE Dec. 31), up slightly from the prior year’s level of 5.9x. The increase was the result of a residential rate decrease, which was mostly revenue neutral (less than 2% decline from year prior) because of offsetting rate increases to other customer classes, in conjunction with an increased debt burden. The revision of the Outlook to Stable from Positive reflects an updated view on the system’s leverage, which is now expected to modestly exceed 7.0x in upcoming years. After the residential rate decrease in fiscal 2023, rates were further held flat in fiscal 2024 compared to previous expectations that incremental adjustments would be implemented beyond fiscal 2023.

Access Report

Thu 05 Sep, 2024 – 2:30 PM ET

The ‘AAA’ rating reflects the ability of the SWIRFT program’s (the program) financial structure, and funding mechanisms, to absorb hypothetical pool defaults in excess of Fitch’s ‘AAA’ stress scenario without causing an interruption in bond payment. Aggregate pool credit risk is measured using Fitch’s Portfolio Stress Model (PSM), and the strength of the program’s financial structure is measured using Fitch’s Cash Flow Model (CFM). The PSM’s liability stress hurdle is measured against the CFM’s breakeven default tolerance rate to produce a model-implied rating. A positive net difference (the default tolerance less the hurdle) in the calculation suggests a passing model output at a given rating stress. Additionally, given the nonstandard investments of the program, Fitch also applied stress to its approximately $1.8 billion in outstanding investments to create a Fitch-modelled investment stress scenario, as per Fitch’s criteria.

Access Report

Thu 05 Sep, 2024 – 3:32 PM ET

The ‘AAA’ rating reflects the ability of the Water Authority Infrastructure Authority of Arizona’s (WIFA or the authority) Master Trust Indenture (MTI) program’s (the program) financial structure to absorb hypothetical pool defaults in excess of Fitch’s ‘AAA’ stress scenario without causing an interruption in bond payments. Aggregate pool credit risk is measured using Fitch’s Portfolio Stress Model (PSM), and the strength of the program’s financial structure is measured using Fitch’s Cash Flow Model. The loans pledged are made by the authority pursuant to state legislation from the authority’s Clean Water Revolving Fund and the Drinking Water Revolving Fund (together, the SRF pledged pool). The SRF pledge pool produces a ‘AAA’ liability stress hurdle of 40.0% in the PSM. On an annual basis, Fitch’s cash flow modeling demonstrates the program can continue to pay bond debt service with a default tolerance rate of 100% through the anticipated October 2027 maturity of the series 2024 bonds without an interruption in debt service. As the default tolerance exceeds the ‘AAA’ stress hurdle, this implies a passing result under Fitch’s criteria.

Access Report

Thu 05 Sep, 2024 – 9:27 AM ET

• Jackson Hospital & Clinic faced demands for repayment
• Montgomery, Alabama non-profit hospital has 344 beds

A 344-bed hospital in Alabama’s capital, Montgomery, defaulted on $60 million of municipal bonds, failing to meet a bondholder trustee’s demand for immediate repayment of the debt.

The non-profit Jackson Hospital & Clinic, squeezed by high labor costs and inflation, didn’t make an interest payment that was due to be paid on Sept. 3, according to a filing. Last month, UMB NA, the bond trustee, demanded full payment of all principal and interest, saying the hospital had breached the terms of bond documents by failing to make rent and lease payments for five months.

Pat Mathews, Jackson’s interim chief financial officer, didn’t respond to a request for comment. Jackson bonds with a 4% coupon, maturing in 2036 last traded at about 53 cents on the dollar on Aug. 27.

Continue reading.

Bloomberg Markets

By Martin Z Braun

September 4, 2024

• Erie County, New York, is selling $110 million of bonds
• The new Bills stadium is expected to open for the 2026 season

Buffalo Bills’ most committed fans, known as Bills Mafia, are known for lending a hand to the team, having cleared snow from the NFL franchise’s stadium for a playoff game earlier this year. Now, these enthusiasts are being offered the chance to finance the team’s new $1.7 billion stadium.

The Erie County Comptroller’s Office plans to open a retail order period on Sept. 23 for individual investors and Buffalo Bills fans to buy a piece of a $110 million municipal bond sale, a day before the debt will be available to institutional investors.

The bonds will help fund the county’s pledged contribution of $250 million toward the construction of a new stadium for the Bills. The county will split its obligation between cash and proceeds raised from the upcoming bond sale.

Continue reading.

Bloomberg Markets

By Maxwell Adler

August 29, 2024

Former Nuveen executive John Miller begins a second act at First Eagle

It seemed as though John Miller’s luck was running out.

Buying the riskiest bonds in the $4 trillion market for state and local debt had made Miller a power player in a corner of Wall Street often derided as staid and boring. But the 2022 bond rout drained billions from his flagship high-yield fund at Nuveen. Last year, on Miller’s 56th birthday, the trillion-dollar asset-management company abruptly announced plans for his departure.

Now, Miller is on the rebound. He joined forces with a boutique firm, recruited a handful of analysts and traders and, earlier this year, started a fund from scratch. Money is pouring in: about $3 billion this year through August, according to Morningstar Direct.

Continue reading.

The Wall Street Journal

By Heather Gillers

Sept. 7, 2024

• Pasco County had seen a large population gain in 2023
• Bond sale priced on Thursday in a negotiated transaction

A county close to Tampa, Florida, is one of the fastest growing in the US and the influx of new residents is causing a problem — its local jail is bursting.

Pasco County — located on Florida’s Gulf Coast — borrowed $65 million from municipal bond investors this week to help finance capital projects including an expansion of its local correctional facility to add about 500 new beds, according to bond documents. A portion of proceeds will also be used to fund improvements to local parks including athletic fields and a recreation complex.

The new Pasco County Corrections Center broke ground last year and construction is expected to be completed in the spring of 2026. The project comes after surging population growth in the area. The county saw a 27% increase in residents over the past decade, with growth accelerating the last several years after slew of office relocations and sports facilities made it a regional center for jobs.

Continue reading.

Bloomberg Markets

By Erin Hudson

September 6, 2024

Larry Spring has overseen the sale of hundreds of millions of dollars of government bonds during his career. But his roughest day was mid-June when the city of Miami first sold its Forever Bond to investors.

“It was a tough day,” Miami’s Chief Financial Officer reflected several weeks later. “I’ve been affiliated with the city for 20 years and it was actually my worst day in the market ever.”

The city was borrowing its first Miami Forever Bond. That is the name of a borrowing plan approved by voters in 2017. The plan calls for borrowing $400 million to spend on five areas: floodwater protection, roads, parks, public safety and affordable housing.

The city started spending the money a year after the vote. But it didn’t actually borrow the money until this summer when the city went looking for investors to lend it its first $179 million dollars. That was in June.

Continue reading.

WLRN Public Media | By Tom Hudson

Published September 4, 2024 at 6:00 AM EDT

The state of California’s ‘AA’ Issuer Default Rating (IDR) incorporates the state’s large and diverse economy, which supports strong, albeit cyclical, revenue growth prospects, a solid ability to manage expenses through the economic cycle and a moderately low level of long-term liabilities. Strong fiscal management, institutionalized across administrations and demonstrated through the buildup of the budgetary stabilization account (BSA) and elimination of past budgetary borrowing, allows the state to better withstand economic and revenue cyclicality.

Access Report

Tue 20 Aug, 2024 – 12:11 PM ET

• Local agencies sold as much as $10 billion of the bonds
• Deals were highly levered and rely on high occupancy

High-yield municipal bonds issued to finance housing for police officers, teachers and nurses in California are showing signs of strain.

Mira Vista Hills Apartments, a 280-unit rental complex in the Bay Area city of Antioch, disclosed in a Friday filing that it didn’t meet a debt-service coverage ratio required by investors. At least four other complexes, known as “workforce housing,” have drawn on reserves since the start of 2023 to help pay their debt, according to securities filings.

About $8 billion to $10 billion of munis — all in a speculative category without a credit rating — have been issued in California to convert market-rate apartments into affordable housing for middle-income households, according to research firm Municipal Market Analytics. Seven of the nation’s 10 priciest housing markets are in the state, according to the National Association of Realtors.

Continue reading.

Bloomberg Markets

By Martin Z Braun

August 20, 2024

• Clyde, Texas, missed its Aug. 1 municipal bond payment
• The action caused S&P to drop debt rating from A- to D

A persistent drought in Texas is hurting the finances of a small town, making it unable to pay bondholders in a rare instance of climate-related default.

The city of Clyde, located roughly halfway between Dallas and Midland, informed investors it couldn’t make a debt payment due in August, according to a securities filing. Instead, its bond insurers — Assured Guaranty and Build America Mutual — were asked to cover the payment, illustrating the financial strain facing the city.

“Such draw is unscheduled and reflects financial difficulties of the issuer, including without limitation financial difficulties resulting from increased costs related to operations and maintenance of the issuer’s waterworks and sewer system,” the filing dated Aug. 15 read. The bonds were sold to support the city’s water and wastewater system.

That caused S&P Global Ratings to drop the grade on the bonds to D from A-, a whopping 15-notch downgrade, according to a report from the company late Friday. It also cost the city its A- credit rating, as S&P downgraded Clyde’s general-obligation debt to B, which is below investment-grade.

Analysts led by Misty Newland wrote that “a lack of willingness to pay an unconditional debt obligation results in a rating cap.”

Clyde is a commuter community near Abilene, and is home to about 4,000 residents. Roughly one-third of Callahan County, where it’s located, is facing a moderate drought. The city has been implementing a drought-contingency plan for several years, which includes double-digit water reductions. Following the restrictions, the town’s water sales decreased — which hit revenues.

On Aug. 1, the day the bond payment was due — Clyde issued a “water emergency” notice, outlining “severe water shortage” conditions with the intention of reducing usage by 30%.

Local government bond defaults are incredibly rare, with those caused by climate-related events all but unprecedented. While bondholders will be made whole because the debt is insured, Clyde’s financial challenges are a stark reminder that the $4 trillion municipal bond market isn’t without risk and extreme weather can pose a threat.

Texas is the epicenter of such weather events in the US, and has faced multiple disasters this year. Hurricane Beryl knocked out power in Houston for days in July. A May derecho punched windows out of skyscrapers in the city and a storm that month dropped hailstones the size of DVDs near Lubbock. The largest wildfire in state history burned more than 1 million acres in the panhandle in February and March.

Currently, more than 30% of Texas is experiencing drought conditions, according to the US Drought Monitor. The most extreme issues are in western part of the state, but almost all of North Texas is facing dryness. Governor Greg Abbott has issued a drought disaster proclamation for the state.

To help reduce water usage, officials in Clyde have prohibited the use of water for cleaning sidewalks and driveways. Only new lawns at residents’ homes can be watered, not existing ones.

The drought has affected life in other ways. Some residents were unhappy that a splash pad — which is a playground of sprinklers used by children — wasn’t working, according to local news station KTXS.com.

“Would you rather have your splash pad running so your kid can spend two hours a day in the water there, or do you wanna be able to bathe your kid with water at your house?,” the mayor told KTXS.com.

Michael Stanton, head of strategy and communications at Build America Mutual, said in an emailed statement that the company’s insurance protected investors. “Although this is a small exposure, our team is in contact with city officials and their professional advisors and will continue to represent bondholders’ interests in those discussions,” the statement read.

Robert Tucker, senior managing director of investor relations and communications at Assured Guaranty, said in a statement that bondholders would be protected. “The type of situation Clyde, Texas, encountered – unexpected conditions leading to the non-payment of debt service – is exactly what our bond insurance is designed for,” he said.

Bloomberg Green

By Amanda Albright

August 19, 2024

— With assistance from Jeremy Diamond, Will Wade, and Songyan Yu

Voters would have to approve a $4.4 billion bond package in November, to be financed by property tax increases over 33 years. Including interest, the package would cost $11 billion.

The Houston Independent School District board voted last week to pass a $4.4 billion bond proposal. This total excludes the interest on the principal. When included, it brings the total debt obligation to nearly $11 billion.

To pay for it, the board will authorize levying new, additional property taxes over 33 years, if voters approve the proposal in November. Taxpayers would be saddled with additional debt and taxes through 2058, according to the bond certificate filed by the district.

This is the largest debt and property tax increase proposal in state history.

Continue reading.

governing.com

Aug. 14, 2024 • Bethany Blankley, The Center Square

The ‘AA’ rating on the revenue bonds and ‘AA’ Issuer Default Rating (IDR) reflect Peace River Manasota Regional Water Supply Authority’s ‘Very Strong’ financial profile in the context of its ‘Very Strong’ revenue defensibility and operating risk profile, as well as the very strong credit quality of the authority’s two largest wholesale customers — Sarasota County, FL (utility system rated ‘AA+’) and Charlotte County, FL. The authority’s revenue defensibility is supported by strong contract provisions with the ability to reallocate costs, limiting bondholder exposure to individual members. The purchasers’ obligation to make payments to the authority is unconditional and payable as an operating and maintenance expense of their respective utilities based on proportional water use. The authority’s operating risk assessment reflects a very low operating cost burden and moderate life cycle investment needs. The revision of the outlook to Negative from Stable reflects the authority’s projected increases in leverage, measured as net adjusted debt to adjusted funds available for debt service (FADS), as it works through a capital-intensive period driven by surface water expansion projects to meet growing demand. Leverage registered 6.1x in fiscal 2023 and is expected to grow substantially to 17.8x in fiscal 2025 in Fitch’s rating case scenario.

Access Report

Thu 22 Aug, 2024 – 2:30 PM ET

Flood risk is rising in Florida due to climate change. How exposed is residential real estate—both directly and indirectly—and what can be done to manage the risks?

Located in a tropical cyclone zone with low elevation and an expansive coastline, Florida faces numerous climate hazards, including exposure to storm surge and tidal flooding that are worsened by sea level rise, and heat stress due to rising temperatures and changes in humidity. Other unique features include the state’s porous limestone foundation which can exacerbate flooding as water seeps into properties from the ground below and also causes saltwater intrusion into water aquifers, and makes adaptation challenging.

Much of Florida’s physical and human capital is located along its vulnerable coast. Two-thirds of the state’s population lives near the coastline, exposing many of them to tidal flooding, and almost 10 percent is less than 1.5 meters within sea level. At the same time, Florida’s economy depends heavily on real estate. In 2018, real estate accounted for 22 percent of state GDP. Real estate also represents an important part of household wealth for the 65 percent of Floridians who are home owners: primary residences represent 42 percent of median home owner wealth in the United States.

In this case study, we focus on residential property in Florida exposed to flooding from storm surges and to tidal flooding and assess the likely impact both in terms of direct and knock-on effects, for example through housing price adjustments (See sidebar: An overview of the case study analysis).

Continue reading.

McKinsey Global Institute

April 27, 2020

In 1968, the Federal Fair Housing Act (FHA) was enacted to protect individuals from discrimination based on certain protected characteristics when they are renting or buying a home, getting a mortgage, seeking housing assistance, or engaging in other housing-related activities. However, a recent class action lawsuit—which is currently on appeal before the federal Sixth Circuit—seeks to stretch one provision of the FHA further than any other case before it, with significant consequences to municipalities.

Under 42 U.S.C. § 3604(a), which codified Section 804 of the FHA, it is unlawful to “make [housing] unavailable” to individuals based on those protected characteristics. Actions such as redlining, discriminatory pricing, racial steering, and discriminatory appraisals have all been held to violate § 3604(a).

But in 2019, a group of individuals filed a class action against the City of Cleveland, Ohio, under § 3604(a). See Picket et al. v. City of Cleveland, Case No. 19-cv-2911 (N.D. Ohio). Their claim? That Cleveland makes housing unavailable when it certifies a tax lien against a property when the owner or tenant has let their water bill become seriously delinquent. (State law allows cities to certify liens in that circumstance, and the plaintiffs do not challenge that authorization.)

Continue reading.

Frost Brown Todd LLP – Philip K. Hartmann, Jesse J. Shamp and Anthony R. Severyn

August 22 2024

• A state trust fund will invest billions to modernize transit
• The bonds were assigned an ‘A’ rating by Fitch Ratings

New Jersey is poised to sell $2.4 billion of bonds for its transportation infrastructure, according to a report from Fitch Ratings.

The New Jersey Transportation Trust Fund Authority is expected to issue $1.3 billion of transportation system bonds and roughly $1.1 billion of transportation program bonds through a negotiated sale in October, the Fitch report said.

The fund is charged with modernizing statewide transportation infrastructure like highways and bridges as well as providing additional capital funding for NJ Transit — New Jersey’s public transit agency. The state is expected to extend as much as $8.8 billion in bonding authorization to the authority over the next five years, or approximately $1.76 billion annually, according to a March press release.

Continue reading.

Bloomberg Markets

By Sri Taylor

August 20, 2024

Future growth is likely to resemble pre-pandemic trends, with longer-term growth prospects limited, supporting a ‘bbb’ assessment. Factors potentially affecting long-term growth include the effects of competing regional gaming options, online gambling and sports betting. The sharp rebound in pledged revenue following pandemic-related shutdowns in 2020 has rebuilt the structure’s cushion against volatility relative to recent years. Additional leverage in the current sale modestly reduces the structure’s cushion against future revenue volatility, but resilience remains consistent with an ‘a’ assessment. The Casino Reinvestment Development Authority is an instrumentality of the State of New Jersey, which is the collection agent for luxury taxes. The brief deposit of these revenues in the state’s general fund caps the rating at New Jersey’s Issuer Default Rating (IDR) of ‘A+’/Stable; this is not currently a rating factor for the bonds given that the bond rating is four notches below the state’s IDR. Pledged revenues are separate from the financial operations of the city of Atlantic City.

Access Report

Tue 20 Aug, 2024 – 12:41 PM ET

STATE COLLEGE — Penn State is prepared to take on up to $700 million in debt to renovate Beaver Stadium, a price tag drawing scrutiny at a time when the university is implementing steep budget cuts and offering buyouts to some employees.

The school has emphasized that the athletics department, which has a self-sustaining budget, will pay back the debt and interest incurred through the renovation process. Students’ tuition and taxpayer dollars will not fund the project, the university has said.

However, Penn State University is likely to take on the necessary debt rather than the athletics department. One expert told Spotlight PA this setup is typical for universities and allows an organization like Penn State to secure better financing costs.

Penn State generally uses its standing as a public university with tens of thousands of tuition-paying students to secure bonds and provide financial backing for debt, according to a review of bond documents. For example, last year Penn State sold $204 million in bonds under the university’s authority. That sale was used in part to finance “replacements to and renovations of Beaver Stadium,” though the university said at the time the bonds would be repaid by athletics.

Penn State declined to make an official available for an interview for this story. A university spokesperson wrote in an email that the university’s support for the project “is a signal of the commitment to bettering our student-athletes’ experience and as a land-grant university, elevating Beaver Stadium’s significance in driving local and state economies.”

Christopher Collins, vice president and senior municipal credit analyst at Moody’s Ratings, told Spotlight PA that although universities could have specific departments take out debt — perhaps as a way to increase accountability — issuing bonds through the entire university lowers financing costs. A university generally has a better credit rating, and a wider source of possible repayment, than a specific department, said Collins, who has analyzed Penn State’s credit rating.

Some university trustees questioned what would happen if Penn State defaults on the debt. Penn State’s athletic department reported $126,000 in profit off of a $202 million total budget in fiscal year 2023.

By Wyatt Massey Spotlight PA State College Aug 22, 2024

When it comes to the construction of the Buffalo Bills’ $1.7 billion new stadium, local officials are taking the concept of “public financing” to a new level.

On Sept. 24, Erie County in western New York will offer fans the opportunity to buy “Bills bonds” toward the development of the new facility being built next door to Highmark Stadium. The county is issuing $125 million in bonds to pay half of its portion toward construction.

The county is offering the bonds to individuals for a single day before it offers them to outside investors.

“This is a once-in-a-generation opportunity,” county comptroller Kevin Hardwick said in a radio interview on Monday, “and there might be some average Bills fans out there who normally do not invest in municipal bonds, who might be interested in saying to themselves or telling their grandchildren that I had a hand in helping construct that stadium.”

The minimum investment for the bond is $5,000. The website for the bond offering indicated that “the Series 2024B Bonds are general obligations of the County and are not an obligation of the Buffalo Bills.”

Sportico has reached out to the Erie County’s comptroller office as well as the Bills, but has not heard back.

Construction of the new Highmark Stadium is being funded largely by taxpayers in one of the most controversial stadium financing deals in recent memory. In March 2022, New York Gov. Kathy Hochul, herself a Buffalo native, announced a deal between the Bills, the state and county to develop the 62,000-seat, open-air stadium in Orchard Park next door to the team’s current home.

Of the $1.4 billion in financing, the state will contribute $600 million while Erie County will put in $250 million. The NFL will loan $200 million to the Bills, and the team itself will add $350 million. The $850 million in state and county contributions are the largest public subsidy ever committed to the development of an NFL stadium. The team will have a 30-year lease for the new field, which will officially be owned by the state.

Healthcare insurer Highmark Blue Cross Blue Shield of Western New York is carrying on its naming rights deal from the current building, which originally opened as Rich Stadium in 1973, to the new stadium. The current Highmark Stadium was also known as Ralph Wilson Stadium after the late founding owner, and New Era Field until the insurer took the rights in 2021.

In April, the Pegula family retained Allen & Company to facilitate the sale of a non-controlling minority stake in the Bills, with a reported “working figure” of 25% to be offered. The Bills are worth $5.03 billion, according to Sportico’s latest NFL franchise valuations, published last week. Buffalo ranks 23rd among all 32 teams, jumping three spots compared to one year ago, as the price tag rose by 23%.

sportico.com

By Jason Clinkscales

August 26, 2024 3:54pm

New York City’s ‘AA’ Long-Term IDR and GO bond ratings reflect New York City’s exceptionally strong budget monitoring and controls, supporting Fitch Ratings’ ‘aa’ financial resilience assessment given the city’s ‘high’ revenue control, ‘mid-range’ expenditure control and Fitch’s expectation that the city will maintain reserves at or above 7.5% of spending. For the purposes of this calculation, Fitch includes unrestricted general fund reserves (the sum of committed, assigned and unassigned), the available balance in the retirees’ health benefits trust (RHBT) and the fiscal year-end budget stabilization and discretionary transfers of surplus for prepayment of certain of the following year’s operating expenditures. The available balance as of fiscal year-end 2023 was $12.8 billion, equal to 11.8% of expenditures and transfers out.

Access Report

Mon 19 Aug, 2024

The City of New York (the “City”) announced the successful sale of $1.8 billion of General Obligation bonds, comprised of $1.5 billion of tax-exempt fixed rate bonds and $300 million of taxable fixed rate bonds. Proceeds from the sale will be used to fund capital projects.

The City received over $327 million of orders during the retail order period and $4.9 billion of priority orders during the institutional order period, which in total represents approximately 3.5x the tax-exempt bonds offered for sale.

Due to investor demand for the tax-exempt bonds, yields were reduced relative to the start of the institutional order period by 2 basis points in 2028, 2029, and 2042; by 3 basis points in 2027 and 2052; by 4 basis points in 2041, 2047, and 2048; by 5 basis points in 2030, 2043, and 2044; by 6 basis points in 2050; and by 8 basis points in 2031.

Final yields ranged from 2.62% in 2026 to 4.19% in 2052.

The tax-exempt bonds were underwritten through a syndicate led by book-running lead manager Loop Capital Markets, with BofA Securities, J.P. Morgan, Jefferies, Ramirez & Co., Inc., RBC Capital Markets, Siebert Williams Shank, and Wells Fargo Securities serving as co-senior managers.

The City also sold $300 million of taxable fixed rate bonds via competitive bid. The bid attracted 8 bidders, with J.P. Morgan winning at a true interest cost of 4.617%.

August 22, 2024

• American Musical and Dramatic Academy borrowed money in 2023
• School faces penalty for covenant default related to cash pile

A drama and arts school with campuses in New York City and Los Angeles is facing an interest rate as high as 14.5% as a penalty for breaching an agreement with its municipal bondholders.

The American Musical and Dramatic Academy didn’t maintain a cash pile that would last three months, breaking an agreement with holders led by Preston Hollow Community Capital. The school had 67 days of cash on hand as of June 30, while it was supposed to maintain 90 days, a regulatory filing shows. Such a breach is known as a covenant default.

Now, the academy will have to pay jacked-up interest rates between 12.25% and 14.5% on two series of debt, according to letters sent to the school this month by Preston Hollow. The correspondence was included in a securities filing posted Thursday. The two series of bonds priced with already-high coupons of 7.25% and 9.5%, according to data compiled by Bloomberg.

Such a move by bondholders is rare in the municipal market. It’s more common for investors to enter into forbearance agreements with struggling borrowers — meaning holders pledge not to take actions such as demanding immediate repayment on debt even if they have that right. For colleges, these agreements provide a runway to fix their finances while often requiring them to disclose more regular information or hire a consultant to offer suggestions.

The right to charge higher interest rates if a borrower defaults is a common protection that corporate and real estate lenders write into their credit documents. In practice, the ability to charge default interest often becomes a key element of negotiations between the parties on how to resolve the borrower’s financial challenges.

Such penalties risk worsening distressed borrowers’ financial situation, said Eric Kazatsky, senior US municipals strategist for Bloomberg Intelligence.

A spokesperson for Preston Hollow declined to comment. John Galgano, AMDA’s chief operating officer, didn’t reply to phone calls or email messages seeking comment. David Silverman, the school’s chief financial officer, didn’t respond to an emailed request for comment.

Campus Real Estate

The American Musical and Dramatic Academy opened in 1964 and is a prominent performing arts institute with about 3,000 students stretched across two campuses, on Manhattan’s Upper West Side and in Hollywood. Its alumni includes Modern Family star Jesse Tyler Ferguson and pop star Jason Derulo.

This isn’t the college’s first brush with distress. The financings last year were meant to provide relief to the academy after it went into covenant default on prior obligations.

In 2023, the school sold $91.6 million of bonds in two separate deals. The borrowing, which refinanced old debt and also included funds for campus projects, was originated by Preston Hollow and the firm purchased $51.65 million of the securities, according to a November statement from the company. The deal “gives AMDA the flexibility to build out exciting new initiatives as they continue to pursue their important mission,” Ron Van Den Handel, a former managing director at Preston Hollow, said in the statement at the time.

Like other small US colleges, the school has struggled in recent years. Its performing-arts focus has also brought unique challenges, especially after Broadway performances closed during the pandemic. Total enrollment has been falling, dropping from 4,098 in 2018-19 to a projected 3,219 in 2023-24, according to the 2023 bond documents.

The letters from Preston Hollow say the school also needs to begin “real estate monetization procedures” as a result of the covenant breach. The 2023 bond documents noted that if the borrower couldn’t satisfy certain financial covenants, it could be required to sell real estate.

The academy has several buildings in New York City and its main facility is located at 211 West 61st Street, close to Lincoln Center. It has an Art-Deco tower in Los Angeles blocks from the Hollywood Walk of Fame, along with other campus buildings.

Bloomberg Markets

By Amanda Albright

August 23, 2024

— With assistance from Erin Hudson

• Treasurer snubs bank’s bid to serve as state fiscal agent
• Announcement marks latest skirmish in anti-ESG fight

Fresh off a win in Louisiana, Bank of America Corp. was dealt a blow by a Republican official in the state.

On Monday, Louisiana State Treasurer John Fleming said he wouldn’t recommend Bank of America’s application to become a state depository and fiscal agent for the state — his counsel will be considered by an ad hoc panel. There are nearly 100 banks that have been approved to work as state depositories and fiscal agents, according to the state.

“It is my opinion and that of many Americans that financial institutions should not weigh in on matters involving a political viewpoint, either conservative or liberal,” Fleming said in a statement, citing concerns that the company is denying banking services to certain clients like religious organizations and gunmakers.

Continue reading.

Bloomberg Politics

By Amanda Albright

August 13, 2024

• FTI hired as adviser for holders of $150 million of munis
• Lutheran Life Communities owns three facilities in Illinois

Investors holding about $150 million of municipal bonds issued to refinance debt of an Illinois senior-living operator hired a financial adviser after the non-profit defaulted on a separate series of obligations.

Majority holders of the non-rated debt sold in 2019 on behalf of Lutheran Life Communities hired FTI Consulting, Inc. to advise on a potential long-term forbearance or debt restructuring, according to a securities filing Wednesday. Lutheran Life operates three continuing care communities in Illinois and one in Indiana.

The hiring came after the non-profit failed to make an Aug. 1 payment on about $25 million of floating-rate debt that was also sold in 2019. A May filing shows that First Midwest Bank, which merged with Old National Bancorp. in 2022, held that portion as of March 31. Kathy Schoettlin, a spokesperson for Old National, didn’t respond to a request for comment.

Continue reading.

Bloomberg Markets

By Martin Z Braun

August 14, 2024

S&P Global Ratings assesses Caritas Affordable Housing Inc.’s Calif. Mobile Home Park Senior Revenue Bonds Series 2024 as aligned with Social Bond Principles, ICMA, 2023. CAH is a 501(c)(3) public benefit corporation based in Irvine, Calif. Along with its sister organization, Caritas Corp., it provides and maintains affordable housing to residents in California.

Download

Through recent updates to California’s Public Contract Code, public agencies are being equipped with new tools to deliver major infrastructure projects through use of the progressive design-build (PDB) model. As more public agencies gain access to the legislative tools available to use PDB, we expect to see an increasing number of water projects undertaken and completed successfully under the PDB or other early contractor delivery methods.

In Nossaman’s California Water Views – 2024 Outlook, I examine the differences between PDB and fixed-price design-build (DB) projects as well as the benefits of and best practices for utilizing a PDB delivery model.

By Elizabeth Cousins on 08.02.2024

The Dormitory Authority of the State of New York sold $144.6 million of tax exempt revenue bonds on behalf of Pace University to refund existing debt.

The sale includes $84.6 million of Series 2024B municipal bonds with maturities ranging from 2025 through 2042, according to an official statement posted Tuesday on MuniOS. Bonds due in 2034 have an interest rate of 5%, yield 3.54% and priced at 111.864.

The $60 million of Series 2024C bonds are variable rate securities. The interest rate payable to investors who hold the debt will be set on a weekly basis. The bonds can be redeemed starting in 2037 and reach final maturity in 2044. Pace has the option to convert the bonds to bear interest at a daily, commercial paper, term or fixed rates, among others.

The first floating rate determination date is scheduled for Sept. 5.

Proceeds will be used to refund bonds sold on Pace’s behalf in 2013 and 2014 by the authority and the Westchester County Local Development Corp.

Pace had operating revenue of $434.8 million in fiscal year 2023, according to the school’s website.

Founded in 1906 as a school for accounting, Pace had total enrollment of 14,092 undergraduate and graduate students for the 2023-24 academic year, and operates three campuses in New York City and Westchester County. The school had about $306.7 million of debt outstanding as of July 30.

The bonds are rated BBB- by S&P Global Ratings and Baa3 by Moody’s Investors Service.

BofA Securities was the underwriter.

Provided by Dow Jones

Aug 14, 2024 11:04am

By Patrick Sheridan

Write to Patrick Sheridan at [email protected]

(END) Dow Jones Newswires

August 14, 2024 14:04 ET (18:04 GMT)

Copyright (c) 2024 Dow Jones & Company, Inc.

• Muni bond sales to help fund Atlanta megadevelopment
• Developer CIM Group backed Miami Worldcenter earlier this year

A CIM Group affiliate is tapping the municipal-bond market to help finance a $4.2 billion megadevelopment intended to transform a downtown section of Atlanta from parking lots into apartments and shops.

JPMorgan Chase & Co. — which plans to provide a $175 million loan for part of the project — is serving as underwriter on two municipal debt deals totaling $556 million associated with the development. Both issues are being sold through the Atlanta Development Authority.

Real estate developer CIM Group is shepherding the project that will add more than 2,600 apartments and more than 2,900 hotel rooms, as well as space for retailers and a data center. The area is currently known as the Gulch, and it’s a defunct rail yard where Atlanta residents gather to tailgate in parking lots before NFL games.

Continue reading.

Bloomberg Markets

By Sri Taylor and Amanda Albright

August 15, 2024

In the recent appellate case New Jersey Realtors v. Township of Berkeley, the Superior Court of New Jersey, Appellate Division, invalidated a municipal ordinance that restricted property ownership in certain senior housing communities to individuals aged fifty-five or older. This decision, rendered on July 31, 2024, highlights the legal limits of municipal authority in enacting land use regulations that impact property rights and underscores the protection against discrimination based on familial status under the federal Fair Housing Act (FHA) and the New Jersey Law Against Discrimination (NJLAD).

The dispute arose when Berkeley Township enacted Ordinance No. 22-13-OA (the Ordinance), amending its land use provisions to mandate that ownership in specific senior housing communities be limited to those aged fifty-five or older. New Jersey Realtors (NJR) challenged the Ordinance, claiming it violated the FHA and the NJLAD by discriminating based on familial status and failing to comport with the exemption for age-restricted housing. NJR argued that the FHA and the NJLAD only require that age-restricted housing be occupied by an individual fifty-five or older.

The core issue here was whether Berkeley Township’s Ordinance, which required that age-restricted units be purchased or owned by individuals aged fifty-five or older, contravened the anti-discrimination provisions of the FHA and the NJLAD, which prohibit discrimination on the sale or lease of property based on familial status. Answering affirmatively, the Appellate Division provided three key reasons to support its holdings.

Continue reading.

Day Pitney LLP – Katharine A. Coffey, Craig M. Gianetti and Larry Zhao

August 5 2024

• MTA plans to sell real estate bonds later this year or in 2025
• New credit expected to provide $2 billion for transit upgrades

New York City’s transit system plans to borrow against real estate taxes it receives to help raise $2 billion for infrastructure upgrades, creating a new borrowing mechanism that’s separate from its traditional farebox credit.

The Metropolitan Transportation Authority, the nation’s largest mass-transit network, is slated to start selling debt backed by real estate transfer tax receipts — a so-called mansion tax — later this year or in early 2025, according to Kevin Willens, the MTA’s chief financial officer.

The state began allocating the mansion tax revenue, along with state and city sales tax receipts, to the MTA in 2019 to help fund necessary capital projects and service improvements. The transit agency collected $345 million of real estate transfer tax revenue in 2023 and anticipates receiving a similar amount each year through 2028, per the MTA’s latest financial plan.

The strong demand for housing in New York City means the levy will provide the MTA with a reliable source of revenue, even as some wealthier residents have decamped for Florida or Texas, according to Matt Fabian, a partner at Municipal Markets Analytics.

New York City is “the most established real estate market in America,” Fabian said. “The risk with a transfer tax is that properties stop transferring because demand for properties goes away. But that has never been the case in New York, even now. Even in the financial crisis, it was never an existential crisis for this tax base.”

The $2 billion of mansion tax bonds will help fund the MTA’s $51.5 billion 2020-2024 capital program, which will upgrade subway stations, finance flood-protection projects and renovate a 130-year-old rail bridge that links New York City to its northern suburbs.

The MTA had $47.4 billion of debt outstanding as of July 24, including $18.3 billion of transportation revenue bonds that are repaid with transit fares, according to MTA data. Adding another borrowing tool provides some relief to its operating budget and offers bondholders a way to invest in the MTA while avoiding ridership fluctuation as transit usage has yet to match pre-pandemic levels.

The mansion tax is a supplemental levy on the transfer of residential properties of at least $2 million. The revenue flows into MTA’s capital lockbox — rather than its operating budget — with that pot of money being reserved for infrastructure needs. Keeping the revenue separate from the operating budget should enhance the new real estate credit, Willens said.

“Our expectation is that it’s going to be a high quality credit,” Willens added.

The MTA has sold other bonds that are repaid from a different revenue source than farebox receipts and bridge and tunnel tolls. The transit provider has issued payroll mobility tax debt, bonds backed by New York City sales tax revenue and also securities repaid with a combination of motor fuel taxes, petroleum business taxes and mortgage recording levies.

While the MTA and state lawmakers have found ways to raise money for the transit system, Fabian says investors need to remember that an MTA bond repaid with money other than farebox revenue is still an obligation of a more than 100-year-old system that already has a high debt level and must modernize and fortify itself from extreme weather events.

“They may not be the same revenue stream,” Fabian said, “but they’re sisters.”

Bloomberg Markets

By Michelle Kaske

August 6, 2024

• Naples, Florida, is selling $21 million of bonds on Tuesday
• Part of proceeds will rebuild pier destroyed by 2022 hurricane

Naples, Florida, is turning to the municipal bond market to rebuild its famous pier ravaged by Hurricane Ian, marking its at least its fifth reconstruction because of extreme weather damage.

Tuesday’s deal comes just days after rain from Tropical Storm Debby inundated the city. About $11 million of proceeds raised from a $21 million bond issuance will be used to reconstruct the Naples Pier, which was destroyed by Hurricane Ian in 2022. The new pier — which will stretch an estimated 1,000 feet into the Gulf of Mexico — will be designed to be more resilient to future storms, the city told investors in preliminary bond documents.

The upcoming reconstruction will be at least the fifth time the iconic pier has been rebuilt. The city replaced it following hurricanes in 1910, 1926, 1944 and 1960. In 2015, it underwent a major $2.7 million renovation. Two years later, Hurricane Irma wrought about $244,000 in damages before Ian dealt a death blow of “catastrophic” damage, according to city officials.

Continue reading.

Bloomberg Markets

By Erin Hudson

August 6, 2024

• Muni bond sales in the state grow at fastest pace in a decade
• FMSBonds expects record underwriting volume for dirt deals

Florida’s transformation into the Wall Street South is fueling a surge in newcomers, wearing on infrastructure across the state and forcing municipalities to borrow at the fastest pace in over a decade.

The state’s municipal borrowers have already sold roughly $15 billion of bonds in 2024, outpacing a national surge in supply. While overall muni sales have increased by about one-third, Florida’s issuance has more than doubled, up 132% since the same period last year. That’s the fastest pace of borrowing since at least 2013, according to data compiled by Bloomberg.

The surge is emblematic of a larger shift, showing how governments are flooding the debt markets with sales to accommodate the infrastructure needs of growing populations. A migration South exaggerated by the pandemic has fueled investments in new schools, roads, bridges, highways and airports — shifting the muni market’s center of gravity. So-called Southern states make up about 35% of muni bond sales this year, up 10 percentage points from 2004.

Continue reading.

Bloomberg Markets

By Maggie Eastland

August 7, 2024

• City had planned tax-exempt general obligation deal Wednesday
• ‘We did not like the volatility in the market’: CFO Jaworski

Chicago is delaying its $643 million bond sale that was expected to price on Wednesday amid volatility in the $4 trillion market for state and local bonds.

“We are not selling today as we did not like the volatility in the market and are waiting for more stable market conditions,” Chicago Chief Financial Officer Jill Jaworski said in an emailed statement.

Chicago had planned to come to market during what was expected to be a busy week for municipal bond sales. Those new transactions are building on a surge of deals that has caused issuance to jump about 38% so far this year, compared to the same period in 2023, data compiled by Bloomberg show.

Continue reading.

Bloomberg Markets

By Shruti Singh

August 7, 2024

Erlanger Health — a hospital system based in Chattanooga, Tennessee — has delayed a $316 million municipal bond sale that was scheduled to price Thursday after yields surged the last several days.

The deal was marketed to investors on Thursday morning at spreads ranging from 58 to 70 basis points over the benchmark, according to a pricing wire seen by Bloomberg. The deal was moved to day-to-day status following inadequate demand from investors, according to people familiar with the matter.

Chicago also paused a bond sale that was scheduled to price Wednesday. Municipal bonds slid on Wednesday in a rout that drove yields on 15-year benchmark debt to surge the most in nearly a year. Prices continued to drop on Thursday.

Erlanger Health — a teaching hospital affiliated with the University of Tennessee — was planning to refinance outstanding debt with some of the proceeds of the debt sale. So-called refunding deals are sensitive to large swings in interest rates because it determines how much savings the borrower can secure. The Health, Educational and Housing Facility Board of the City of Chattanooga, Tennessee, is planning to issue the debt on behalf of Erlanger.

“Due to recent market volatility and yield expectations falling short of our target, we have decided to pause the transaction,” Lynn DeJaco, the system’s chief financial officer, said in an emailed statement. “We will continue to monitor market conditions and reapproach the market next week.”

A spokesperson for Morgan Stanley declined to comment.

Bloomberg Markets

By Nic Querolo and Amanda Albright

August 8, 2024 at 12:54 PM PDT

The wagons are circling around anti-environmental, social, and governance laws enacted in Texas and Oklahoma amid a flurry of studies on their financial impact and congressional scrutiny.

The two states were early enactors of laws that led to the blacklisting of more than 20 financial firms, including municipal bond underwriters, for “boycotting” or “discriminating” against the fossil fuel or firearm industries. The laws call for divestment of public pension and other assets and prohibit governmental contracts worth $100,000 or more with banned firms.

The passage of a wide-variety of anti-ESG bills slowed dramatically this year with Pleiades Strategy, a research and advisory firm, reporting just six becoming law, compared to 23 in 2023. Louisiana in June enacted a law aimed at punishing banks and others unfriendly to the gun industry.

Studies pointing to adverse financial and economic impacts from the Texas and Oklahoma laws are piling up, attracting attention from Democratic members of the U.S. House Judiciary Committee who requested information on their financial effects.

“A growing body of evidence demonstrates that these policies threaten public employees’ retirement savings and leave taxpayers on the hook for higher fees and increased borrowing costs,” Reps. Jerrold Nadler, D-N.Y., and J. Luis Correa, D-Calif., said in a May 20 letter to Texas officials.

They cited a study by researchers at The Wharton School and Chicago Federal Reserve that was the first to examine the fallout from diminished underwriter competition under two Texas laws. It found bond issuers in the Lone Star State will incur $300 million to $500 million in additional interest on $31.8 billion of debt sold during the first eight months after the laws took effect Sept. 1, 2021.

A more recent study conducted for the Texas Association of Business Chambers of Commerce Foundation that showed a spike in average underwriting spreads per $1,000 of bonds issued by Texas local governments since the laws’ effective date was also cited in the inquiry.

Texas Comptroller Glenn Hegar called the studies “erroneous and fundamentally flawed” in his June 7 response to the federal lawmakers, which also highlighted the more than $9 billion in oil and natural gas production tax revenue that flowed into the state’s coffers in fiscal 2023.

“Because there is a myriad of factors that affect these (issuance and borrowing) costs, including the size, type, credit quality, liquidity and structure of each municipal bond transaction, not to mention general economic conditions such as a significantly higher interest rate environment, it is impossible to accurately conclude that any transitory adjustments or disruptions on the municipal bond market in Texas are solely or even partially attributable to the change in statute,” he wrote.

Justin Marlowe, director of the Center for Municipal Finance at the University of Chicago’s Harris School of Public Policy, said while it’s good to see some evidence on actual financial impacts making its way into the debate over anti-ESG state laws, more and better data is required.

“We need more updated data to not necessarily prove the point, I think the Wharton study and others do a pretty good job of showing that there was an impact,” he said. “The question is whether the negative financial impacts for borrowers in the state have sustained ? whether that’s been an ongoing phenomenon or whether it was just a more immediate response to the passage of that law in Texas and Oklahoma and elsewhere.”

The Texas-based American Energy Institute pointed to faulty findings in the March Texas Association of Business study conducted by Austin-based economic analysis and public policy consulting firm TXP, Inc., using Texas Bond Review Board data for 2023 and 2022 that was restated by the board in May.

“When corrected data from the Texas Bond Review Board was applied, it showed that the costs of bond issuance in 2022 and 2023 remained consistent with historical averages, debunking the report’s claims,” an institute opinion piece stated.

The Texas Association of Business said a note was added to the study to clarify the analysis was based on the bond review board’s original annual report.

“This does not change the fact that a tightening of the competitive bond market in Texas limits local governments’ access to financing for taxpayer-approved bonds, which ultimately results in more debt shouldered by taxpayers and Texas businesses, as multiple other economic analyses have similarly shown,” it said in a statement.

Bond issuers in Texas have said the laws’ reach has extended beyond underwriting to other governmental services provided by banks such as letters of credit.

The American Energy Institute also pushed back against a study that found a 2022 Oklahoma law banning state and local government contracts with investment banks that “boycott” the fossil fuel industry boosted municipalities’ borrowing costs by 59 basis points on average.

The study, conducted by the University of Central Oklahoma’s Economics Department and released by the Oklahoma Rural Association in April, has methodological flaws that included cherry-picked data and comparisons, according to the institute.

“It’s clear that the Energy Discrimination Elimination Act of 2022 is crucial for safeguarding Oklahoma’s economic interests and ensuring sound fiduciary practices,” Institute CEO Jason Isaac said in a statement. “Our research debunks the flawed claims against the (act), highlighting its role in protecting vital energy sectors and promoting financial stability for the state.”

Using the average yield to worst real-time measure of market borrowing rates for the S&P Municipal Bond Oklahoma Index since 2022, Paul Tice, a senior fellow at think tank National Center for Energy Analytics, reported that average yield measurement for issuers in the state tightened by 14 basis points since Oct. 31, 2022.

“Almost all of the yield volatility over the past 19 months has been driven by movements in underlying interest rates as seen by the lockstep trading between Oklahoma and its municipal peers and the U.S. Treasury Bond Index,” he wrote in a June 13 piece posted on the RealClear Energy website.

There are additional studies, including one released in April by Texas-based economic analysis firm Perryman Group, which said the state’s banning of municipal bond underwriters or restricting public pension funds’ investment options could lead to “notable” economic harm.

A 2023 study by Econsult Solutions Inc. looked at the impact if bills, similar to the Texas laws, were enacted in six other states, including Oklahoma, finding that state would have incurred an estimated $49 million in additional interest costs for bonds issued over a 12-month period.

Oklahoma Treasurer Todd Russ, who has blacklisted seven companies, including Barclays, Bank of America (BAC), JP Morgan, and Wells Fargo (WFC), defended the importance of the oil and gas industry to the state and pointed to a commercial banking sector trend toward “de-banking companies that do not align with certain ESG criteria.”

“This practice can have severe consequences for Oklahoma industries, limiting their access to capital and financial services,” he said in a June 28 statement. “By resisting policies that lead to de-banking, Oklahoma can safeguard its key industries from financial exclusion and ensure that businesses have the necessary resources to thrive.”

Enforcement of the Energy Discrimination Elimination Act was permanently halted last month by an Oklahoma County District Court judge, who found it violated the state constitution. The Oklahoma Supreme Court is expected to issue a procedural ruling soon related to the state attorney general’s appeal of the injunction.

The pro-ESG movement is fighting back.

Unlocking America’s Future, a nonprofit advocacy group that works to counter attacks against ESG, launched a Texas campaign in May that includes a six-figure digital ad campaign “to set the record straight about the economic costs of Texas’ extreme positions on a range of issues including responsible investing.”

As part of its 2024-25 platform and resolutions, the National Association of Counties noted “special interest groups are actively collaborating on a nationwide campaign to restrict and eliminate local authority regarding pensions, municipal bonds, and government funds by passing legislation and resolutions at both the national and state levels that oppose local control and free-market principles.”

The group adopted a policy in July urging “Congress and the administration to support policies that provide for local governments’ ability to invest and borrow as they self-determine, which must include continued access to free capital and credit markets.”

By Karen Pierog

BY SOURCEMEDIA | MUNICIPAL | 08/06/24 08:00 AM EDT

S&P, KBRA and Moody’s Announce Assured Guaranty’s Financial Strength Is Unchanged Following Merger of Principal Subsidiaries; Assured Guaranty Municipal Bonds Now Carry Assured Guaranty Inc.’s Ratings

Assured Guaranty Ltd. (NYSE: AGO) (AGL, together with its subsidiaries, Assured Guaranty) announced today that S&P Global Ratings (S&P), Kroll Bond Rating Agency (KBRA) and Moody’s Ratings (Moody’s) have indicated that they see no change to Assured Guaranty’s financial strength as a result of the August 1, 2024 merger of Assured Guaranty Municipal Corp. (AGM) into Assured Guaranty Inc. (AG).

S&P

S&P, which assigns a AA (stable) financial strength rating to AG, released a report on August 1, 2024, stating “there are no changes to the ratings of any of the S&P Global rated entities in the AGL group hierarchy.” Additionally, they wrote: “We expect no change in the company’s business strategy or approach to risk management. When evaluating capital adequacy for the companies, we run a consolidated capital adequacy model and already considered the business being assumed by AG in our analysis.”

This followed a July 9, 2024 S&P bulletin stating that the merger “won’t change its assessment of the Assured Guaranty group’s business risk or financial risk positions.”

KBRA

KBRA issued a press release on August 1, 2024 about Assured Guaranty’s insurance financial strength ratings (IFSRs) after the merger was completed, in which it wrote: “The IFSRs of AG (AA+/Stable), AGUK (AA+/Stable), AGE (AA+/Stable), as well as the Issuer Rating (A+/Stable) and all outstanding Debt Ratings for Assured Guaranty US Holdings Inc., remain unchanged.”

KBRA had previously written, on July 8, 2024, that “there will be no rating changes to any KBRA-rated insured obligations currently insured by AGM, AGUK or AGE as a result of the merger,” adding that it “views the merger and the resultant simplification of the overall organizational structure as creating capital, operational, and regulatory efficiencies, as well as enhancing Assured Guaranty Ltd.’s overall global platform and scale as management continues to position its business to optimize its market position and future growth opportunities.”

Moody’s

A Moody’s press release issued on August 2, 2024, noted that “by operation of law, all securities that had been insured by Assured Guaranty Municipal Corp. are now guaranteed obligations of Assured Guaranty Inc.” and that the insurance financial strength (IFS) rating of AG is A1 (stable).

Previously, on July 10, 2024 in response to the announcement of the planned merger, Moody’s issued a press release affirming the A1 (stable) IFS ratings of AG, AGM and Assured Guaranty UK Limited, as well as the Baa1 (stable) senior debt ratings of Assured Guaranty US Holdings Inc., the Baa2(hyb) (stable) junior subordinated debt rating of Assured Guaranty Municipal Holdings Inc. and the Baa1 (stable) long-term issuer rating of AGL.

Moody’s wrote that its affirmation reflects the Assured Guaranty group’s “strong capital profile, conservative underwriting of US municipal, international infrastructure and structured finance risks and leading market position in the financial guaranty insurance sector.” They added that “Assured Guaranty’s ability to organically generate significant capital through premium and investment earnings make the credit profile of its operating subsidiaries resilient to a broad range of stress scenarios.” Moody’s stated that it believes the merger “results in a moderate strengthening of the combined entity’s credit profile relative to the current overall credit profiles of AGM and AG.”

Additionally, in Moody’s view, “The larger insured portfolio and claims paying resources of post-merger AG enhances risk diversification and reduces the size of large single risk exposures relative to capital. Despite the planned extraction of $300 million of capital through a special dividend following the merger, AG’s pro forma risk-adjusted capital adequacy will be stronger than AGM’s current capital adequacy.”

Procedural Rating Agency Merger Action

As AG is the surviving company of the merger, all three rating agencies withdrew their ratings of AGM, and bonds that had been insured by AGM now carry AG’s ratings.

Any forward-looking statements made in this press release, including those regarding growth opportunities for Assured Guaranty, demand for its product, and sustained economic conditions for increased new business, reflect Assured Guaranty’s current views with respect to future events and are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such statements involve risks and uncertainties that may cause actual results to differ materially from those set forth in these statements. These risks and uncertainties include, but are not limited to, difficulties executing Assured Guaranty’s business strategy; those risks and uncertainties resulting from changes in rating agency models or opinions; Assured Guaranty’s continued capital adequacy; adverse credit developments in Assured Guaranty’s insured portfolio and the impact of those developments on rating agency models and opinions; other risks and uncertainties that have not been identified at this time, management’s response to these factors, and other risk factors identified in Assured Guaranty’s filings with the Securities and Exchange Commission. Readers are cautioned not to place undue reliance on these forward-looking statements, which are made as of August 5, 2024. Assured Guaranty undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

About Assured Guaranty Ltd.

Assured Guaranty Ltd. is a publicly traded (NYSE: AGO), Bermuda-based holding company. Through its subsidiaries, Assured Guaranty provides credit enhancement products to the U.S. and non-U.S. public finance, infrastructure and structured finance markets. Assured Guaranty also participates in the asset management business through its ownership interest in Sound Point Capital Management, LP and certain of its investment management affiliates. More information on Assured Guaranty can be found at: AssuredGuaranty.com.

Provided by Business Wire

Aug 5, 2024 7:20am

Connectivity to provide access to deeper liquidity in the fixed income markets

NEW YORK–(BUSINESS WIRE)–ICE Bonds, part of Intercontinental Exchange (NYSE: ICE), a leading global provider of technology and data, and MarketAxess Holdings Inc. (Nasdaq: MKTX), the operator of leading electronic trading platforms for fixed-income securities, today announced plans to connect their respective liquidity networks to bring greater efficiency and access to deeper liquidity in fixed income markets to the institutional and wealth management spaces.

With this announcement, ICE Bonds and MarketAxess plan to establish unique connectivity to their respective protocols and liquidity pools. This will enable ICE Bonds’ automated trading system (ATS), ICE TMC, and MarketAxess’ Open Trading network to communicate with each other, expanding the depth and reach for their respective global user bases.

“This collaboration connects two mature liquidity networks in fixed income markets to offer new trading and risk management solutions for clients,” said Pete Borstelmann, President of ICE Bonds. “By combining our complementary strengths, we aim to offer users expanded opportunities to access liquidity in corporate and municipal bonds, enhancing market efficiency and benefiting participants across both platforms.”

By leveraging ICE Bonds’ established retail brokerage and wealth management presence alongside MarketAxess’ leadership in institutional trading, the interaction between liquidity pools aims to enhance price transparency, best execution, and overall market liquidity for all participants.

“We look forward to delivering enhanced value and innovation to our clients through this collaboration,” said Rich Schiffman, Global Head of Trading Solutions at MarketAxess. “Our joint efforts are focused on providing access to deeper liquidity across municipal and corporate bonds and diversifying trading options for participants in our marketplace.”

About MarketAxess

MarketAxess (Nasdaq: MKTX) operates a leading electronic trading platform that delivers greater trading efficiency, a diversified pool of liquidity and significant cost savings to institutional investors and broker-dealers across the global fixed-income markets. Over 2,000 firms leverage MarketAxess’ patented technology to efficiently trade fixed-income securities. MarketAxess’ award-winning Open Trading® marketplace is widely regarded as the preferred all-to-all trading solution in the global credit markets. Founded in 2000, MarketAxess connects a robust network of market participants through an advanced full trading lifecycle solution that includes automated trading solutions, intelligent data and index products and a range of post-trade services. Learn more at www.marketaxess.com and on X @MarketAxess.

The press release may contain forward-looking statements, including statements within the meaning of the “safe harbor” provisions of the United States Private Securities Litigation Reform Act of 1995 with respect to the proposed collaboration, including statements regarding the connection of liquidity networks and the anticipated benefits of such connection. These and other statements that relate to future events are based on MarketAxess’ current expectations. The Company undertakes no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise. More information about the factors affecting MarketAxess’ business and prospects are contained in MarketAxess’ periodic filings with the Securities and Exchange Commission and can be accessed at www.marketaxess.com.

About Intercontinental Exchange

Intercontinental Exchange, Inc. (NYSE: ICE) is a Fortune 500 company that designs, builds, and operates digital networks that connect people to opportunity. We provide financial technology and data services across major asset classes helping our customers access mission-critical workflow tools that increase transparency and efficiency. ICE’s futures, equity, and options exchanges — including the New York Stock Exchange — and clearing houses help people invest, raise capital and manage risk. We offer some of the world’s largest markets to trade and clear energy and environmental products. Our fixed income, data services and execution capabilities provide information, analytics and platforms that help our customers streamline processes and capitalize on opportunities. At ICE Mortgage Technology, we are transforming U.S. housing finance, from initial consumer engagement through loan production, closing, registration and the long-term servicing relationship. Together, ICE transforms, streamlines, and automates industries to connect our customers to opportunity.

Trademarks of ICE and/or its affiliates include Intercontinental Exchange, ICE, ICE block design, NYSE and New York Stock Exchange. Information regarding additional trademarks and intellectual property rights of Intercontinental Exchange, Inc. and/or its affiliates is located here. Key Information Documents for certain products covered by the EU Packaged Retail and Insurance-based Investment Products Regulation can be accessed on the relevant exchange website under the heading “Key Information Documents (KIDS).”

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995 — Statements in this press release regarding ICE’s business that are not historical facts are “forward-looking statements” that involve risks and uncertainties. For a discussion of additional risks and uncertainties, which could cause actual results to differ from those contained in the forward-looking statements, see ICE’s Securities and Exchange Commission (SEC) filings, including, but not limited to, the risk factors in ICE’s Annual Report on Form 10-K for the year ended December 31, 2023, as filed with the SEC on February 8, 2024.

About ICE Bonds

Trading and execution services are offered through ICE Bonds Securities Corporation or ICE Bonds, member FINRA, MSRB and SIPC. The information found herein, has been prepared solely for informational purposes and should not be considered investment advice, is neither an offer to sell nor a solicitation of an offer to buy any financial product(s), is intended for institutional customers only and is not intended for retail customer use.

Contacts

Media:
Marisha Mistry for MarketAxess
+1 917 267 1232
[email protected]

Damon Leavell for ICE
[email protected]
(212) 323-8587
[email protected]

Investor:
Stephen Davidson for MarketAxess
+1 212 813 6313
[email protected]

Katia Gonzalez for ICE
[email protected]
(678) 981-3882
[email protected]

The Wyoming State Treasurer’s Office Modernizes Its Loan Management Practices with DebtBook

DebtBook, a leading provider of cloud software for treasury and accounting teams in the public finance industry, today announced that the Wyoming State Treasurer’s Office (Wyoming STO) has selected the firm’s Debt Management solution to centralize and unify its loan data, processes, and reporting.

​The Wyoming State Treasurer’s Office is a constitutional office responsible for agency administration, banking and cash management, distributions, investment of state funds, and the unclaimed property program.

Using DebtBook as its centralized loan management platform, the Wyoming State Treasurer’s Office will increase operational efficiencies and enable organization-wide knowledge capture. With DebtBook, the Wyoming STO team will be able to track their entire loan portfolio by borrower, prepare year-end financial disclosures, and easily share all loan-related information with accounting and financial reporting teams, as well as with external stakeholders.

DebtBook provides a single-source debt management and accounting platform that helps power the organizations that improve our communities. The configurable solution is purpose-built to help treasurers and accountants in public finance streamline their debt management processes, including, data management, payments, accounting and financial reporting, disclosure, tax compliance, and proceed spend-down management. With greater data integrity, productivity, and visibility, DebtBook customers deliver better financial outcomes while reducing risk for their organizations.

About DebtBook

DebtBook offers modern treasury and accounting software designed to help state and local government, higher education, healthcare, and others go from operational overload to strategic leadership.

Our Debt and Cash Management solutions empower strategic treasury and improve financial outcomes by automating operational work and allowing teams to more easily analyze their data and extract valuable insights. Our Lease and Subscription Management solutions give accounting teams hours back to their day by automating GASB 87 and 96 compliance workflows. Visit debtbook.com to see why more than 2,100 organizations nationwide work with DebtBook.

Provided by Business Wire

Aug 6, 2024 6:01am

Florida’s Miami-Dade County sold $235 million in municipal bonds to fund the development of a new government center.

The Series 2024A Capital Asset Acquisition Special Obligation Bonds have maturities ranging from 2027 to 2054, according to a filing Tuesday on MuniOS. Bonds due in 2034 have an interest rate of 5% and a yield of 3.120%.

Jefferies won the bonds in competitive bidding on July 30.

Miami-Dade plans to use the proceeds from the tax exempt bonds to fund the acquisition, construction, improvement and renovation related to the West Dade Government Center. The facility would be aimed at providing a one-stop hub to get permitting paperwork approved, according to the Miami Herald.

The county also plans to use proceeds from the bonds to fund capitalized interest through Oct. 1, 2026.

Total costs for the projects related to the complex are listed as $238.8 million in the official statement posted on MuniOS.

The bonds have been assigned ratings of Aa2 by Moody’s Investors Service and AA by S&P Global Ratings.

Provided by Dow Jones

Aug 6, 2024 12:05pm

By Patrick Sheridan

Write to Patrick Sheridan at [email protected]

(END) Dow Jones Newswires

August 06, 2024 15:05 ET (19:05 GMT)

Copyright (c) 2024 Dow Jones & Company, Inc.

The Atlanta Development Authority plans to issue $200 million in municipal bonds to fund the Centennial Yards downtown development project.

The issue will be split into the $55 million in Series 2024A-1 senior revenue bonds, and $145 million in Series 2024A-2 senior revenue bonds, with maturities starting in 2029. Details about maturities, coupons and yields weren’t available in a preliminary official statement posted Monday on MuniOS.

The project includes the redevelopment of approximately 50 acres of land in downtown Atlanta, known as the Gulch, into a pedestrian-friendly area with residential, retail and commercial space to be marketed as Centennial Yards.

J.P. Morgan Securities is the lead underwriter.

Provided by Dow Jones

Aug 5, 2024 2:17pm

By Paulo Trevisani

Write to Paulo Trevisani at [email protected]

(END) Dow Jones Newswires

August 05, 2024 17:17 ET (21:17 GMT)

Copyright (c) 2024 Dow Jones & Company, Inc.

The Port of Seattle sold $817.9 million in municipal bonds to finance improvements in the Seattle-Tacoma airport, Washington state’s largest.

The agency sold $648.94 million in series 2024B, taxable bonds and $168.98 million in non-taxable series 2024A bonds, according to a document posted on MuniOs.

Maturities on the non-AMT portion ranged from 2025 to 2040, with a 5% coupon. The 10-year yield is 3.05%.

Maturities on the AMT tranche ranged from 2025 to 2044, with a 5% coupon on maturities up to 2038 and 5.25% for the remaining bonds. The 10-year yield is 3.76%.

A $183.4 million term bond due July 1 2049 is part of the issuance. It carries a 5.25% interest rate and a 4.3% yield.

Besides funding improvements to the airport, the proceeds will also refund certain Port of Seattle obligations, making deposits to reserve accounts and cover other financial costs.

Bonds are payable from the Port’s revenues. BofA Securities was the lead manager.

Moody’s Investors Service assigned a A1 rating to the bonds. Both S&P Global Ratings and Fitch Ratings have rated the bonds as AA-.

Provided by Dow Jones

Aug 8, 2024 10:22am

By Paulo Trevisani

Write to Paulo Trevisani at [email protected]

(END) Dow Jones Newswires

August 08, 2024 13:22 ET (17:22 GMT)

Copyright (c) 2024 Dow Jones & Company, Inc.

CHICAGO — Mayor Brandon Johnson announced Fitch Ratings, Inc. has upgraded the City of Chicago’s General Obligation (GO) rating to ‘A-’ from ‘BBB+,’ and Chicago’s Sales Tax Securitization Corporation’s (STSC) senior lien bonds to ‘AAA’ from ‘AA+. The ratings agency has also maintained its outlook for both STSC and GO at Stable.

“We are appreciative that Fitch Ratings has increased the City’s rating on our bonds, which we use to fund needed investments in our infrastructure. These rating upgrades recognize our commitment to responsible fiscal management and the economic strength and vitality of Chicago,” Mayor Brandon Johnson said. “It reflects the vibrancy of our economy and will lower our borrowing costs, supporting the hard work and dedication of our administration to build a stronger, more resilient Chicago for all residents.”

The upgrades reflect the implementation of Fitch’s new U.S. Public Finance Local Government Rating Criteria. Fitch cites the City’s adherence to sound fiscal practices, as well as a commitment to solving budget gaps through structural solutions as contributing factors. The ratings agency noted that the City’s demographic and economic profile remain an asset, and that Chicago’s population in 2022 was of sufficient size and the economy was sufficiently diversified to qualify for Fitch’s highest overall size/diversification category.

“For years, we have believed that rating agencies undervalue the strength and potential of Chicago,” Chief Financial Officer Jill Jaworski said. “A big driver of this rating increase is the fact that the new criteria afford due recognition of Chicago’s financial resilience and resources deriving from our large and diversified local economy.”

Improved ratings lead to lower borrowing costs and broaden the pool of investors in the City’s bonds. The savings, resulting from the upgrade, makes funds available to further invest in the City’s programs. With a stronger financial position, the City of Chicago can enhance services such as education, public safety, and infrastructure, thereby improving the overall quality of life for all its residents.

July 31, 2024

Mayor’s Press Office 312.744.3334

• The tax-free bonds are expected to price Aug. 1, are rated BBB
• Plan is to open new headquarters before 2026 men’s World Cup

The US Soccer Federation is set to borrow $200 million this week through a sale of municipal debt that will help the organization finance the construction of a new national training center and headquarters in the Atlanta area.

A municipal development agency for Fayette County outside Atlanta is set to issue the tax-exempt bonds on Aug. 1 on USSF’s behalf to fund the roughly $225 million project, which will draw on support from a package of state and local tax incentives and donations. The contributions include $50 million from Arthur Blank, a co-founder of Home Depot Inc. and owner of the National Football League’s Atlanta Falcons and Major League Soccer’s Atlanta United FC.

The venue in Fayette County will feature over a dozen soccer fields and 200,000 square feet of office space. US Soccer will shift there after more than three decades in Chicago. The debt will be secured by the deed on the training facility and a lien on gross revenue from the federation’s sponsorship and media contracts, ticket sales and game-day revenue. The bonds are rated BBB by Fitch Ratings, two steps above speculative grade.

Continue reading.

Bloomberg Markets

By Maxwell Adler

July 30, 2024

• County estimates $862 million in savings over three decades
• Plan to purchase office building draws some criticism

Miami has become so pricey for renters that even the county wants to become its own landlord. It’s selling $234 million of municipal debt to do just that.

Florida’s most-populous county plans to use the proceeds of this week’s bond sale to purchase a mostly vacant, half-century old office building for several government departments. The move will allow the county to own its real estate rather than leasing, but some local officials see it as too high of a price for a building that was in financial trouble and sits about 13 miles west of downtown Miami.

“It’s better to own than to rent if you can afford it,” said Jimmy Morales, chief operations officer for the county. “Let’s invest. We’re not going away. It’s not like we’re going to relocate our headquarters.”

Continue reading.

Bloomberg Markets

By Maggie Eastland

July 29, 2024

• Massachusetts school’s $108 million debt sale gets Aa1 rating
• Proceeds will go toward a new art museum, recreation center

Williams College, the liberal arts school sprawled across 450 acres of the Berkshire highlands in Massachusetts, is out to show municipal bond investors the greater value of some higher education debt.

The alma mater of former President James Garfield and current US Rugby Olympian Kristi Kirshe plans to sell $108 million of bonds next week to help fund a new art museum and a multipurpose recreation center, according to bond documents. The Massachusetts Development Finance Agency will serve as issuer and Goldman Sachs Group Inc. as lead underwriter.

At least 50 universities and colleges have flooded the market this year with more than $10 billion in securities to address project funding and refinancing needs, according to data compiled by Bloomberg. That’s more than double the amount for the same period in 2023.

Continue reading.

Bloomberg CityLab

By Sri Taylor

August 1, 2024

The affirmation of New York City’s ‘AA’ Long-Term IDR and GO bond ratings incorporates Fitch Ratings’ analysis using its new “U.S. Public Finance Local Government Rating Criteria.” The ratings reflect New York City’s exceptionally strong budget monitoring and controls, supporting Fitch’s ‘aa’ financial resilience assessment given the city’s ‘high’ revenue control, ‘mid-range’ expenditure control and Fitch’s expectation that the city will maintain reserves at or above 7.5% of spending. For the purposes of this calculation, Fitch includes unrestricted general fund reserves (the sum of committed, assigned and unassigned), the available balance in the retirees’ health benefits trust (RHBT) and the fiscal year-end budget stabilization and discretionary transfers of surplus for prepayment of certain of the following year’s operating expenditures. The available balance as of fiscal year end 2023 was $12.8 billion, equal to 11.8% of expenditures and transfers out.

ACCESS REPORT

Fri 26 Jul, 2024 – 6:11 PM ET

• Bonds will fund developments on Tejon’s commerce center
• Tejon Ranch projects have fueled debate on fires, urban sprawl

Tejon Ranch, the largest stretch of private land in California, is tapping the municipal bond market for $61.6 million bond deal to expand the commercial center roughly 83 miles north of downtown Los Angeles.

Encompassing roughly 270,000 acres, or about 420 square miles, the mixed-use property owned by the publicly traded Tejon Ranch Co. has long been at the center of a debate over wildfires and urban sprawl. The latest financing is for a project that would more than double the size of the Tejon Ranch Commerce Center, a complex that currently houses distribution centers for IKEA, Caterpillar, L’Oreal and other retail giants.

Tejon Ranch Public Facilities Financing Authority is expected to issue the bonds for the center on Thursday. Proceeds will be used for what’s anticipated to be a 20 million-square-foot development, according to bond documents. Construction is already underway on an apartment community slated to add 228 housing units by next year.

Continue reading.

Bloomberg Markets

By Sri Taylor

July 22, 2024

Connecticut has sold $214.2 million in municipal bonds to refinance outstanding debt.

The general obligation refunding bonds include Series E-1 2024 bonds for $27.5 million, and 2024 Series E-2 bonds totaling $186.7 million.

The bonds mature starting in September 2025 through September 2034. The debt maturing next year will pay investors an interest rate of 5.00% and yield 2.90%. The 2034 maturities also pay interest at a rate of 5.00% and yield 2.93%. The securities aren’t subject to mandatory redemption prior to maturity, according to an official statement posted Thursday on MuniOS.

All of the bonds sold are backed by a pledge of revenue from the state.

The securities were issued to refund all or parts of the state’s 2014 Series D and Series E general obligation bonds.

The bonds were sold by the state in a competitive sale to WellsFargo.

Moody’s Investors Service rated the bonds Aa3, S&P Global Ratings and Fitch Ratings both have the debt rated at AA-.

Provided by Dow Jones

Jul 26, 2024 1:43pm

By Paulo Trevisani

Write to Paulo Trevisani at [email protected]

(END) Dow Jones Newswires

July 26, 2024 16:43 ET (20:43 GMT)

Copyright (c) 2024 Dow Jones & Company, Inc.

San Antonio’s ‘AA+’ Long-Term IDR and bond ratings reflect Fitch Ratings’ strongest assessment for financial resilience, ‘aaa’, based on the city’ s low-midrange budgetary flexibility and Fitch’s expectation that available reserves will remain at or above 20% of spending. The ratings also reflect strong population growth and a population and economy of sufficient size and diversification, respectively, balanced against weak demographic and economic metrics and an elevated liability burden.

ACCESS REPORT

Tue 30 Jul, 2024 – 4:47 PM ET

Minnesota’s ‘AAA’ IDR and GO bond ratings reflect the state’s steadily growing and broad-based economy, highly educated workforce, expanding population and a revenue structure well designed to capture economic growth. The ratings also reflect a low long-term liability burden and historically strong control over revenue and spending that, in conjunction with a sophisticated approach to reserve funding, leaves Minnesota well positioned to manage through economic cycles while maintaining a high level of financial flexibility. The ‘AA+’ ratings on the general fund appropriation bonds, COPs and lease revenue bonds, one notch below the state’s IDR, reflect the slightly higher degree of optionality associated with payments subject to annual appropriation. The ‘AA+’ programmatic rating on the Minnesota School District Credit Enhancement Program reflects both supportive structural factors and the state’s commitment to make timely debt service payments if a participating district is unable to, which Fitch views as similar to an annual appropriation debt security.

ACCESS REPORT

Tue 30 Jul, 2024 – 4:25 PM ET

Key Rating Drivers Portfolio Credit Risk Approximately 62% of OWRB’s loan pool consists of borrowers exhibiting investment-grade ratings. This translates to an implied pool quality, measured by aggregate rating and loan term, of ‘BBB-‘. The pool consists of 163 obligors, with the top 10 obligors comprising about 66.8% of the loan portfolio. Obligor security is solid, with nearly all of the pool backed by water or sewer revenue pledges. Financial Structure The program’s cash flows are adequate with projected minimum annual DSC of about 1.4x. Fitch’s cash flow modeling demonstrates that program resources are sufficient to withstand hypothetical pool defaults in excess of Fitch’s ‘AAA’ liability rating stress hurdle, as derived using the PSM, without causing an interruption in bond payments. Program Management Management has demonstrated strength and capability in its underwriting and monitoring processes, as evidenced by the fact that the program has never experienced a pledged loan default.

ACCESS REPORT

Wed 17 Jul, 2024

The downgrade to ‘AA-‘ reflects Texas Children’s material underperformance in profitability driven by multiple factors, including weaker than expected volumes in the Houston market, a delayed opening of the new Austin inpatient facility and operating headwinds faced by the health plan. These factors contributed to the operating income loss of approximately $198.1 million (negative 6.4% operating margin and negative 3.1% operating EBITDA margin) through the first six months of FY24. Fitch Ratings does not expect Texas Children’s to meet its obligated group debt service coverage covenant at FYE24.

ACCESS REPORT

Wed 17 Jul, 2024

The rating incorporates the county’s ‘aaa’ financial resilience, which is based on its high midrange budgetary flexibility and an expectation for available reserves to be maintained equal to at least 10% of spending, compared to the current level of 27%. The economic and demographic strength composite, which incorporates the county’s unemployment rate relative to the nation, educational attainment and median household income (MHI) as a percentage of the portfolio median, is ‘Strong’ but offset by a ‘Weak’ population trend metric. Population size and economic diversification are neutral to the rating. The rating also incorporates the county’s ‘Midrange’ long-term liability burden composite. The rating additionally reflects the application of one positive analytical factor that recognizes the county’s role as the center of an important and growing MSA that contributes significantly to the national economy.

ACCESS REPORT

Thu 18 Jul, 2024

The ‘A-‘ rating reflects South Carolina Public Service Authority’s (Santee Cooper or the authority) financial profile and leverage ratio, measured as net adjusted debt to adjusted funds available for debt service (FADS), which improved to 10.4x in 2023, but remains elevated. The Outlook revision to Stable reflects Fitch Rating’s expectation that Santee Cooper’s financial flexibility and revenue defensibility will improve following the expiration of its agreement to lock rates through January 16, 2025. The agreement was reached as part of a legal settlement to resolve significant litigation challenging the authority’s ability to recover costs related to the V.C. Summer nuclear project (the Cook Settlement). The improved flexibility should allow the authority to support higher leverage. Moreover, with the expiration of the rate lock approaching, the effect of previously deferred costs appears to be manageable, even if these costs cannot be recovered in the future.

ACCESS REPORT

Fri 19 Jul, 2024

LAS VEGAS — Oakland Athletics executive Sandy Dean told the Las Vegas Stadium Authority on Thursday that the club does not expect to spend the entire $380 million in public money allocated to build a new stadium in Las Vegas.

Dean said the A’s plan to spend $350 million of those funds, leaving $30 million on the table. He also told the authority that the club plans to finance $300 million of the stadium cost, but no lenders have been secured.

“We’ve had strong interest from a number of companies that want to participate in that portion of the project,” Dean said.

The other $850 million needed to build the $1.5 billion stadium would come from private equity.

Continue reading.

By Associated Press

Published July 18, 202

The Stadium Authority is told the team is “in good shape” for private financing and expects to have agreements in place by the fall.

A representative of the Oakland Athletics said Thursday the team is in “good shape” on securing financing for its future $1.5 billion stadium on the Strip, but didn’t offer specific details on how the franchise will fund its expected $1.2 billion share of the stadium construction costs.

During a Las Vegas Stadium Authority meeting, a partner with the Fisher family and team owner John Fisher said the A’s plan to use only $350 million of the legislatively approved $380 million in public financing, and never planned to use the full amount of financing provided by state lawmakers last year.

Sandy Dean said the team will offset a portion of the public money through debt financing.

Continue reading.

The Nevada Independent

by Howard Stutz

July 18th, 2024

• City faces a $117 million budget shortfall this year
• Development group plans to build on old stadium site

Oakland, California, risks having to slash spending and stall capital projects if officials are unable to close the sale of the city’s soon-to-be defunct pro-sports arena in the next six weeks.

The Bay-Area city is facing a $117 million budget gap this fiscal year and a $175 million shortfall for the next. It’s relying on cash from the sale of the Oakland-Alameda County Coliseum, where Major League Baseball’s Athletics are playing their final season. Yet that deal is far from finalized.

To avoid cuts to city services, Oakland needs cash from the sale to come through by Sept. 1. There isn’t a written purchase and sale agreement and the African American Sports and Entertainment Group — which plans to buy the facility — hasn’t given the city a good faith deposit, according to city council member Janani Ramachandran, who voted against the plan to adjust Oakland’s budget with those funds.

Continue reading.

Bloomberg Economics

By Maxwell Adler

July 17, 2024

The ‘AA’ Issuer Default Rating (IDR) reflects the University of California (UC) system’s growing enrollment and very strong student demand characteristics, solid international reputation, steady operating performance inclusive of a sizable and accretive health system, generally steady support from the State of California (IDR AA/Stable) and expectations of flexibility and manageable leverage through a sizable capital improvement program. The ‘AA’ rating on the general revenue bonds (GRBs) reflects the support of UC’s broad revenue pledge of unencumbered system revenues.

ACCESS REPORT

Tue 09 Jul, 2024

San Francisco is planning to sell $1.15 billion in municipal bonds to help pay for improvements to its sewer system.

The Public Utilities Commission of the City and County of San Francisco will issue $432.3 million 2024 Series A bonds, $85.8 million 2024 Series B bonds, $547.8 million 2024 Series C bonds and $86.3 million 2024 Series D bonds to help finance capital projects benefiting wastewater treatment including its Sewer System Improvement Program, as well as retiring tax-exempt commercial paper notes and other purposes.

The 2024A and 2024C bonds have been designated as green bonds, meeting the Water Climate Bond Standard. The 2024A and 2024B notes are federally taxable, according to a document posted Monday on MuniOS.

Officials say the sewer program is aimed at helping maximize system flexibility, improving operational and seismic reliability, as well as promoting current and future regulatory compliance. San Francisco’s combined sewage and stormwater system handles an average of about 40 billion gallons a year.

The interest rate and yield on the debt have yet to be determined. The bonds are expected to price on July 17 and 18 and the transaction has a preliminary closing date of July 31.

The bonds are secured by a pledge of net revenues from the Wastewater Enterprise under the utilities commission.

Moody’s Ratings assigned Aa2 to all of the bonds. S&P Global Ratings assigned AA to the 2024B, 2024C and 2024D bonds but hasn’t assigned a rating to the 2024A note.

BofA Securities and Morgan Stanley are the lead underwriters.

Provided by Dow Jones

By Patrick Sheridan

Jul 10, 2024 2:55pm

Write to Patrick Sheridan at [email protected]

Maryland’s Baltimore County plans to sell $386.9 million of general obligation bonds, including $160 million of construction bonds and $227 million of refunding bonds, according to a preliminary offering statement posted Monday on MuniOS.

The county will sell $115 million of Baltimore County Consolidated Public Improvement Bonds, and $45 million of Baltimore Country Metropolitan District Bonds. The refunding bonds consist of $124.2 million of Baltimore County Consolidated Public Improvement Bonds and $102.6 million of Baltimore County Metropolitan District Bonds.

The securities will be sold in a competitive bidding process on Tuesday. Public Resources Advisory Group is advising on the sale.

Money to repay buyers of the public improvement bonds will come from the general revenues of the county, including property and income taxes. The primary source of repayment for the metropolitan district bonds are special assessments and charges levied against property in the area.

Money raised from the sale of the improvement bonds will be used for public works, land preservation, and education. Proceeds from the construction bonds will be used for designing, building and acquiring water supply, sewerage and drainage systems for the county.

Moody’s Ratings has rated the bonds Aaa. S&P Global Ratings and Fitch Ratings have rated the securities at AAA.

Provided by Dow Jones

Jul 8, 2024 1:39pm

By Stephen Nakrosis

Write to Stephen Nakrosis at [email protected]

• Bond proceeds will help build student space with ocean views
• Students pay $32,950 to attend former governor’s alma mater

The elite Catholic high school that educated former California Governor Jerry Brown plans to tap the municipal bond market to raise $132 million to spruce up its 11-acre San Francisco campus.

St. Ignatius College Preparatory, a private high school just blocks from the Pacific Ocean has plans to build a new 165,000 square-foot learning complex complete with classrooms, gardens, cafes and the campus chapel. The so-called New Learning Commons will cost an estimated $185 million, most of it funded by municipal bonds, in a deal slated to price on July 17. The remaining financing will come from donations and its endowment, among other funds, according to preliminary bond documents.

“Our existing facility was built in 1969, and it’s time for something new,” said Ken Stupi, the school’s vice president of finance and administration in an interview. “We need the space.”

Continue reading.

Bloomberg Markets

By Maggie Eastland

July 11, 2024

Absent tax policy changes, Fitch expects Connecticut’s underlying revenues to grow only modestly over time, consistent with the state’s wealthy and diverse, but slow-growing, economic profile. Connecticut’s natural pace of spending growth is expected to marginally outpace revenue growth despite recently extending robust budget controls for the next decade. The state has consistently demonstrated the ability to cover its comparatively high fixed costs with more than a decade of full actuarial contributions to pensions supplemented by statutory additional pension payments from excess revenues. The state’s long-term liability burden is elevated and among the highest for U.S. states but still moderate relative to personal income. Connecticut’s robust fiscal resilience is bolstered by statutory mechanisms supporting accumulation of reserves, including setting aside in the budget reserve fund volatile revenue collections over specific thresholds and a required excess margin of revenues over budgeted spending.

ACCESS REPORT

Fri 12 Jul, 2024

Fitch Ratings-New York-11 July 2024: On the effective date of July 18, 2024, Fitch Ratings will revise the long-term rating to ‘AA+’ from ‘AA-’ and assign a short-term ‘F1+’ rating to the Triborough Bridge and Tunnel Authority, NY’s general revenue variable rate bonds subseries 2003B-2. The Rating Outlook will be Stable for the long-term rating.

The rating action will be in connection with (1) the mandatory tender of the subseries 2003B-2 bonds,(2) the addition of an irrevocable direct-pay letter of credit (LOC) to be issued by TD Bank, N.A. (TD Bank, rated AA-/F1+/Negative), which will provide support for the subseries 2003B-2 bonds; (3) the remarketing of the subseries 2003B-2 bonds as VRDBs in the daily rate mode; and (4) the amendment and restatement of the certificate of determination for the bonds, which will take place on July 18, 2024.

KEY RATING DRIVERS
The long-term ‘AA+’ rating will be determined using Fitch’s dual-party pay criteria and will be based jointly on the underlying long-term rating assigned to the subseries 2003B-2 bonds by Fitch (AA-/Stable), and the long-term rating assigned by Fitch to TD Bank (AA-/Negative), which will provide a LOC to support the subseries 2003B-2 bonds. The short-term ‘F1+’ rating will be based solely on the short-term rating of the bank providing the LOC. For information about the underlying credit rating see Fitch’s rating action commentary dated Jan. 31, 2024 at ‘www.fitchratings.com’.

Fitch’s dual-party pay criteria considers the likelihood of the failure of both a rated obligor and a bank LOC provider. The methodology results in a long-term rating that is up to two notches higher than the stronger of the two credits if the following conditions are met: (1) both entities have a rating of ‘A’ or higher; (2) the transaction is structured such that payments from both the municipal issuer and the bank are in the flow of funds and both entities would have to fail to perform before the bonds defaulted; and (3) the interest rate modes to be covered by Fitch’s rating provide for either a mandatory purchase at the end of each interest rate period, or a purchase demand option. A one- or two-notch uplift will apply to the long-term rating depending on the frequency of the purchase demand option or the duration of the interest rate period which concludes with a mandatory tender.

The bonds will provide holders with a same day tender option while in the daily rate mode and an option to tender bonds upon seven-days notice while the bonds bear interest in the weekly interest rate mode; both daily and weekly modes will be rated by Fitch. Fitch will apply a two-notch uplift, which will result in a long-term rating of ‘AA+’ for the bonds.

TD Bank will be obligated to make regularly scheduled payments of principal and interest on the bonds in addition to payments upon maturity, acceleration and redemption, as well as purchase price for tendered bonds. The LOC will have a stated expiration date of July 18, 2029, unless extended or earlier terminated, and will provide full and sufficient coverage of principal plus an amount equal to 53 days of interest at a maximum rate of 9% based on a year of 365 days and purchase price for tendered bonds, while in the daily and weekly rate modes. TD Securities (USA) LLC will be the remarketing agent for the bonds.

The subseries 2003B-2 bonds will initially bear interest at a daily rate but may be converted to a weekly, commercial paper, term or fixed interest rate. While the bonds are in the daily or weekly rate modes interest payments will be on the first business day of each month starting on Aug. 1, 2024. The trustee will be obligated to make timely draws on the LOC to pay principal, interest, and purchase price. Funds drawn under the LOC are held uninvested, and are free from any lien prior to that of the bondholders.

Holders may tender their bonds on any business day, provided the tender agent and remarketing agent are given the requisite prior notice of the purchase. The bonds are subject to mandatory tender: (1) upon conversion of the interest rate; (2) upon expiration, substitution or termination of the LOC; (3) following receipt of written notice from the bank of an event of default under the letter of credit and reimbursement agreement, and (4) following receipt of notice from the bank that the interest component will not be reinstated and directing such mandatory tender. Optional and mandatory redemption provisions also apply to the bonds.

RATING SENSITIVITIES

Factors That Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade
The Long-Term rating will be tied to the underlying long-term rating assigned to the bonds and the long-term rating that Fitch maintains on the bank providing the LOC. Changes to one or both of these ratings may affect the long-term rating assigned to the bonds. Additionally, if either the underlying bond rating or the bank rating were downgraded to ‘A-‘ or lower, the dual-party pay criteria could no longer be applied, and the Long-Term rating assigned to the bonds would then be adjusted to the higher of the bank rating and the underlying bond rating.

The short-term rating to be assigned to the bonds will be adjusted downward in conjunction with the short-term rating of the bank providing the LOC.

Factors That Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade
The long-term rating will be tied to the underlying long-term rating assigned to the bonds and the long-term rating that Fitch maintains on the bank providing the LOC. Changes to one or both of these ratings may affect the long-term rating assigned to the bonds.

The short-term rating to be assigned to the bonds is at the highest rating level and cannot be upgraded.

The Dormitory Authority of the State of New York plans to sell almost $1.29 billion of municipal bonds backed by money collected from the state’s sales tax.

The Series 2024A bonds will be available in three separate tranches as part of a competitive sale scheduled for Wednesday, according to a preliminary offering statement posted on MuniOS. Public Resources Advisory Group is acting as an advisor on the sale.

Bonds being sold in Bidding Group 1 and Bidding Group 2 total about $430.3 million and $437.8 million, respectively, and pay an interest rate of 5%. The securities being offered in Bidding Group 3 total about $419 million and will be offered at a minimum interest rate of 5% and a maximum rate of 5.25%.

Proceeds from the sale will be used to finance, refinance and reimburse some or all of the costs related to certain capital projects. That includes work done as part of the Consolidated Local Street and Highway Improvement Program, and projects for the Metropolitan Transportation Authority.

The Dormitory Authority is one of three entities authorized to issue state sales tax revenue bonds. The state estimates it will collect about $19.1 billion in sales tax receipts during the 2024-2025 fiscal year. That is up from about $16.5 billion in the 2021-2022 fiscal year.

Moody’s Ratings assigned the bonds a rating of Aa1.

Provided by Dow Jones

Jul 9, 2024 9:45am

By Adam L. Cataldo

Write to Adam L. Cataldo at [email protected].

The Dormitory Authority of the State of New York sold $1.22 billion of municipal bonds to cover the costs of transportation programs and other projects.

The authority issued three groups of tax-exempt Series 2024A bonds maturing between 2026 and 2056, all with a 5% interest rate. The 10-year bonds carry a 2.98% yield, according to a statement published Thursday on MuniOs.

DASNY initially planned to raise nearly $1.29 billion with the sale.

The proceeds are meant to finance, refinance or reimburse the costs of certain capital projects, including work done as part of the Consolidated Local Street and Highway Improvement Program and projects for the Metropolitan Transportation Authority.

The bonds were sold in competitive bidding on Wednesday. Morgan Stanley bought the first tranche of bonds, which mature between 2026 and 2041. J.P. Morgan Securities bought the second group, maturing between 2042 and 2050, and BofA Securities bought the third tranche, maturing between 2051 and 2056.

The bonds are backed by money collected from the state’s sales tax. The state estimated it would collect about $19.07 billion in sales tax receipts during the 2024-2025 fiscal year.

Interest is payable on each March 15 and Sept. 15, starting in March 2025.

Moody’s Ratings has assigned the bonds an Aa1 rating and Kroll Bond Rating Agency rated them AAA.

Provided by Dow Jones

By Paulo Trevisani

Jul 12, 2024 10:35am

Write to Paulo Trevisani at [email protected]

Henry Ford Health plans to build a $235 million Central Energy Hub as part of a broader $2.2 billion Detroit hospital campus expansion known as Destination: Grand.

Orrick represented the underwriters and served as special tax counsel in design, construction, financing, operations and maintenance deal for the Central Energy Hub, which will provide electric heating and cooling to several new hospital buildings.

Innovating in the energy as a service market, the deal achieved meaningful delivery and operational risk transfer of the Central Energy Hub to Provident Resources Group and Kiewit Development Company. That enables Henry Ford Health to focus on its core mission of providing world-class healthcare to its community.

The deal also involved tax-exempt financing that lowered the cost of capital and maximized the scope for the project.

In an interview with IJGlobal, Orrick’s Matthew Neuringer discussed the nuances of the solution the Orrick team helped design and implement.

“This is a novel application of this particular type of not-for-profit tax-exempt financing solution through a project-developer-led approach for the energy as a service space,” Neuringer said.

Plans for the Central Energy Hub are part of a major construction project that includes a new state-of-the-art patient tower with all private rooms, a 1,500-space parking deck and a physical rehabilitation institute through a partnership with Shirley Ryan AbilityLab.

THE COMPANIES

Henry Ford Health is a leading integrated and academic healthcare system based in Detroit, serving southeast and central Michigan.

In March of 2023, Henry Ford Health began looking for a private partner to design, build, finance, operate and maintain the Central Energy Hub. HFH selected Henry Ford Health Energy Partners (e.g. Kiewit, Veolia and Provident) as the preferred bidder.

Kiewit HFH Investors is the sole member of Henry Ford Health Energy Partners and a 100% equity sponsor.

Henry Ford Health Energy Partners has contracted with Kiewit Development Company for long-term management services.

“The project enables Henry Ford to focus on its core mission of transformational healthcare services and expanding those services while partnering with a world class provider of DBFOM services and energy development to focus on the non-core mission of the hospital development,” Neuringer said in the interview.

Henry Ford Health said in a statement that the Central Energy Hub “will feature a hot and chilled water pump system that will provide electric heating and cooling to the new hospital facilities, allowing the system to limit and eventually fully avoid natural gas usage in those facilities. That means those buildings, including the CEH itself, will produce zero fossil fuels or emissions by our target dates in 2050.”

THE TEAM

Orrick’s Matthew Neuringer led the team as underwriters counsel. The team also included Robyn Helmlinger, Charles Cardall, Young Lee, Joseph Lodico, Ladan Mohaddes, Joshua Bonney, Ian Busche, Eric Newman & Henry McKenzie.

LEARN MORE

• Henry Ford Health
• Henry Ford Health news release on Central Energy Hub
• Kiewit Development Company
• Provident Resources Group announcement
• Read the IJGlobal article (requires subscription)
• Read More Orrick Client Results

The upgrade of the city’s IDR and GO rating to ‘AA+’ from ‘AA’ reflects implementation of Fitch’s new “U.S. Public Finance Local Government Rating Criteria”. The ‘AA+’ rating incorporates the city’s ‘aa’ financial resilience assessment, which reflects a limited budgetary flexibility and an expectation that available reserves will be maintained between 17.5% and 25% of spending (compared to the current 19%). The rating also reflects the city’s midrange long-term liability burden (42nd percentile of the Fitch local government rating portfolio), midrange population trend (42nd percentile) and strong demographic and economic level, the composite of which is at the 64th percentile of Fitch’s local government portfolio. The rating further reflects the application of positive additional analytical factor notches that recognize the city’s role as the center of an important and large MSA with a vital role in the national economy. The ‘AA’ rating for the lease revenue bonds and commercial paper notes reflects the slightly higher optionality associated with the requirement to budget and appropriate for their debt service.

ACCESS REPORT

Fri 05 Jul, 2024 – 3:24 PM ET

State lawmakers will likely place two bonds, one for climate change impacts and one for school repairs – each worth $10 billion – on the November ballot. The bonds will require a two-thirds approval from both chambers to reach the ballot.

California voters will likely decide whether to let the state borrow $20 billion to fight climate change and support schools, issues that advocates say are in need of a cash influx in light of recent budget cuts.

State lawmakers said Sunday that they reached agreements to place both a $10 billion bond to pay for climate change impacts and another $10 billion bond for school repairs.

Voter approval of borrowing is never a sure thing, even in a presidential election when turnout is high and the electorate skews more progressive. In 2020, for example, voters rejected a $15 billion schools facilities bond.

Continue reading.

governing.com

July 3, 2024 • Ari Plachta, The Sacramento Bee, TNS

Localities Seek Regional Solution As State Cuts Funding Resources

Voters in San Francisco and eight adjoining counties will decide in the November election whether to support spending up to $20 billion to build or preserve affordable housing.

The ballot referendum could make enough funding available through municipal bonds to develop or preserve about 70,000 houses priced for households with low and moderate incomes. Its chances of passing depend on whether voters’ concerns about the housing crisis outweigh their fears of the higher property taxes needed to pay for the bonds.

The matter is headed for the ballot after the Bay Area Housing Finance Authority, the writer of the measure, voted to support it at a meeting this week. The California state legislature created the agency in 2019 to address the region’s spiraling housing costs.

Continue reading.

CoStar News

By David Holtzman

June 26, 2024

The Issuer Default Rating (IDR) upgrade to ‘AA+’ reflects the implementation of Fitch Ratings’ new “U.S. Public Finance Local Government Rating Criteria”. The ‘AA+’ IDR also reflects the city’s ‘aaa’ financial resilience assessment and moderate long-term liability burden, balanced against weak demographic and economic trends and level metrics, including flat population growth, elevated unemployment, and below-average median household income (MHI).

ACCESS REPORT

Wed 26 Jun, 2024

Watch video.

Bloomberg Markets: The Close – Muni Moment

July 2nd, 2024, 2:19 PM PDT

Houston plans to sell a total of $720.4 million of municipal bonds to payoff outstanding legal obligations and existing debt.

The city will sell Series 2024A bonds totalling $589.4 million to cover expenses related to the settlement of a legal dispute between the Houston Professional Fire Fighters’s Association, according to a document posted on MuniOs. The Series 2024B securities, for $131 million, are bonds that will go to refund debt maturing in in 2025 and 2026.

Preliminary pricing information on the interest rate and yield on the debt wasn’t provided. Investors will be paid back by money raised from city taxes on property.

Moody’s Investors Service has rated the bonds Aa3.

Ramirez & Co. is lead underwriter on the deal.

Provided by Dow Jones

Jul 1, 2024 12:08pm

By Paulo Trevisani

Nashville plans to issue $350 million in municipal bonds to pay for upgrades at Vanderbilt University.

Proceeds from the sale will be used to finance the cost of acquiring, constructing and installing certain capital improvements to the educational and educational support facilities at the university, according to a document posted on MuniOS.

The bonds will be sold on Vanderbilt’s behalf by the Health and Educational Facilities Board of the Metropolitan Government of Nashville and Davidson County.

The interest rate and yield on the debt have yet to be determined, according to a document posted on MuniOS. The bonds are expected to price July 10 and the transaction has a preliminary closing date of Aug. 1.

Bond holders will be repaid with funds from the school’s endowment, tuition, fees and other charges to students and revenue from the university’s medical center.

Founded in 1873, Vanderbilt is located on a 330-acre campus in Nashville, Tenn., and has about 13,500 undergraduate, post-graduate and professional students. The university operates what it describes as 10 different academic units including schools of nursing, medicine, law and engineering.

Moody’s Investors Service and S&P Global Ratings have assigned ratings of Aa1 and AAA, respectively, to the bonds.

RBC Capital Markets and BofA Securities are lead underwriters on the deal.

Write to Patrick Sheridan at [email protected]

Provided by Dow Jones

Jul 1, 2024 11:21am

Florida’s Miami-Dade County plans to issue $923.5 million in municipal bonds to refund debt sold in connection with capital improvements at Miami International Airport.

Proceeds will be used to refund aviation bonds series 2014, 2014A and 2014B.

Miami-Dade County is issuing $782.4 million Aviation Revenue Refunding Bonds Series 2024A subject to the alternative minimum tax and $141.1 million Aviation Revenue Refunding Bonds Series 2024B, which is non-AMT.

The interest rate and yield on the debt have yet to be determined, according to a document posted Tuesday on MuniOS. The bonds are expected to price July 16 and the transaction has a preliminary closing date of Aug. 1.

Bondholders will be repaid with funds from the terminals, grounds, runways and taxiways of the Miami International Airport and three other general aviation airports.

The airport is American Airlines’ largest international hub operation, including providing most of the carrier’s capacity from the U.S. to the Caribbean and Latin America.

S&P Global Ratings and Fitch Ratings have each assigned A+ to the Series 2024 bonds.

Barclays is the lead underwriter.

Provided by Dow Jones

Jul 3, 2024

By Patrick Sheridan

Key Rating Drivers Revenue Defensibility – ‘aa’ Favorable Service Area, Affordable Rates for a Significant Majority of the Population: The city retains the legal authority to adjust rates as needed without external oversight. Fitch considers the monthly residential water and sewer bill affordable for about 77% of the service area population based on standard monthly usage of 7,500 gallons for water and 6,000 gallons for sewer. The favorable service area is supported by the city’s role as a regional economic center and state capital, that is characterized by a moderate unemployment rate relative to the nation, yet below-average income levels. The customer count contracted in fiscal 2023 with the implementation of a new billing system, but in prior years was growing less than 1% annually; modest growth around this level is expected to continue. Income levels are about 30% lower than the national median as of 2022. The unemployment rate has decreased to 3% since 2020. However, it was 6% less than the national average in 2023.

ACCESS REPORT

Fri 05 Jul, 2024 – 10:19 AM ET

Key Rating Drivers Revenue Framework – ‘aaa’ Revenue performance over time has exceeded U.S. GDP growth, and Fitch expects this to continue to support strong growth prospects. The state has complete independent control over taxation, with an unlimited legal ability to raise operating revenues as needed. Expenditure Framework – ‘aa’ Washington possesses ample expenditure flexibility, with statutory commitments, broad responsibility for education and infrastructure spending offset by low carrying costs. Washington also benefits from the broad expense-cutting authority common to most U.S. states. Washington’s spending growth, absent policy actions, will likely be marginally above its solid revenue growth, requiring regular budget management to ensure ongoing balance. Long-Term Liability Burden – ‘aaa’ The combined burden of debt and net pension liabilities is low as a percentage of personal income but above the median for U.S. states. Debt ratios incorporate the funding of substantial capital needs, particularly for transportation, but are offset by a moderate net pension liability and an expanding economic resource base.

ACCESS REPORT

Wed 26 Jun, 2024 – 3:00 PM ET

The ‘AA’ Issuer Default Rating (IDR) and subordinate lien bond rating reflect the authority’s very strong financial profile in the context of its very strong revenue defensibility and operating risk profile, both assessed at ‘aa’. The strength of the revenue defensibility is rooted in the authority’s independent ability to increase user charges for both retail and wholesale customers without external oversight as well as its location within a robust economic area. The operating risk profile reflects a very low operating cost burden and moderate life cycle ratio.

ACCESS REPORT

Thu 27 Jun, 2024

The Ohio Water Development Authority has sold $250 million of revenue bonds to fund clean water projects across the state.

Money from the sale will go to the authority’s Drinking Water Assistance Fund, which lends money to government agencies to help them pay for public water projects.

Securities maturing in 2034 will pay investors an interest rate of 5% and yield of 2.9%, according to a document posted Tuesday on MuniOS.

The bonds are backed by various sources of revenue, including all interest payments made on loans by the fund, along with all payments made on already existing and future loans that the fund makes.

The fund was established in 1997 following passage of the Safe Drinking Water Act Amendments of 1996, which was meant to help states finance infrastructure repairs so they could maintain compliance with federal clean water requirements and protect public health.

The bonds were rated by Moody’s Ratings Aaa, and by S&P Global Ratings AAA.

Stifel Nicolaus & Company and Ramirez & Co. were lead underwriters on the deal.

Provided by Dow Jones

Jul 3, 2024 4:04pm

By Stephen Nakrosis

• Net liability rose 5% in 2023, according to annual report
• Mayor says city still faces long-term structural challenges

Chicago’s pension burden climbed again last year as new laws and accounting measures added to costs, and first-term Mayor Brandon Johnson looks for new revenue.

The net pension liability across the city’s four retirement funds rose about 5% to $37.2 billion as of Dec. 31, up from $35.4 billion a year earlier, according to Chicago’s latest annual financial report.

The amount the city owes to its four pensions that pay benefits to retired firefighters, police officers, municipal workers and laborers increased because of changes in pension assumptions and legislation, according to the report. The increase in costs was partly offset by investment income.

Continue reading.

Bloomberg Markets

By Shruti Singh

July 1, 2024

• School would be able to borrow more if Princeton campus sells
• Effort shows struggle of small schools facing enrollment pinch

Rider University, a small college outside of Trenton, New Jersey, is trying to raise additional funds to help an ongoing liquidity crunch.

College officials asked bondholders for permission to borrow against the mortgage on the school’s main campus in Lawrenceville, New Jersey, according to a bond filing dated Friday. If approved, the move would free up much-needed cash for Rider in the short-term.

“In the spirit of good partnership with our current bondholders, we have been in discussion with them regarding this, and we understand that a majority of them are willing to consent to the amendment,” said Kristine Brown, a spokesperson for the school.

The proposal shows the mounting challenges for small schools to make ends meet as they contend with declining enrollments and rising costs. Those pressures have driven colleges across the US to close or merge, while pushing others into new lines of business like online education, adult learning and monetizing real estate.

Continue reading.

Bloomberg Markets

By Nic Querolo

July 2, 2024