LOS ANGELES — The California State Public Works Board is offering next week's largest deal, with $793 million of bonds for the State Department of Corrections and Rehabilitation.

The bonds, scheduled to price on Wednesday, are being issued to finance design and construction costs at Mule Creek State Prison in Plymouth, Calif., and the Richard J. Donovan Correctional Facility in San Diego.

Each project will include the construction of a new infill complex as well as improvements at the existing jail. The SPWB estimates that construction will begin in May, with anticipated occupancy dates of March 2016 for the Mule Creek project and February 2016 for the Donovan project.

Proceeds will also fund a construction reserve and the reimbursement of an interim loan from the state's Pooled Money Investment Account previously used for construction costs.

The bonds are secured by lease rental payments made by state agencies to the SPWB, subject to annual state legislative appropriations.

Reflecting the appropriation requirement, credit rating agencies have assigned the bonds ratings at one notch below their rating on California's general obligation bonds.

"The A2 rating reflects strong legal mechanisms for lease payments in spite of some abatement risk, the weaker security provided by lease revenue bonds relative to the state's general obligation debt, and the credit standing of the State of California, whose general obligation debt is rated A1 with a stable outlook," Moody's Investors Service said in its credit report.

The agency also assigned the revenue bonds a stable outlook, based on its outlook on California, which has a stabilized economy and finances, according to Moody's.

Standard & Poor's and Fitch Ratings, which both assign California's GO bonds an A rating, assigned A-minus ratings to the new bonds.

Fitch gave a stable outlook and Standard & Poor's assigned a positive outlook, reflecting their outlooks on the state.

The SPWB, created in 1946, is empowered to acquire, construct, improve, and operate public buildings and related facilities for state agencies. Since 1985, it has also been active in the construction of facilities for purposed of higher education and corrections.

Morgan Stanley and Wells Fargo Securities are joint senior managers on next week's deal, leading a syndicate of 18 underwriters.

Stradling Yocca Carlson & Rauth is bond counsel and KNN Public Finance is financial advisor.

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