Delayed L.A. convention center deal a question of when, not if

Los Angeles Convention Center

A $1.8 billion deal to finance the expansion of the Los Angeles convention center was delayed this week, but the transaction, given its centrality to the city's plans, is likely to reappear.

Unlike refunding bonds that can lose their reason for being if interest rates spike, Los Angeles needs to offer new money debt to finance a project with a timetable that is closely linked to the 2028 Summer Olympics. The bonds are already approved by the city council.

Los Angeles debt manager Ha To declined to comment on the Municipal Improvement Corporation of Los Angeles lease revenue bond deal, or Monday's decision to move the deal, which had been expected to price for institutions Wednesday, to the day-to-day calendar.

"We do not respond to press inquiries during our active marketing period," To said. "Please see the POS, [preliminary offering statement] for any information regarding the bond transaction."

Morgan Stanley, leading a seven-bank syndicate, was set to price two tranches of lease revenue bonds, a $1.08 billion tax exempt Series 2026C series and a $43.5 million taxable 2026-D series on Wednesday.

But mid-day Monday, it was announced the bonds were going to day-to-day, meaning the finance team would decide to price the bonds based on market conditions on a given day.

Morgan Stanley declined to comment on the decision.

"Halloween's still a month away but I think what's spooking issuers this week was the speed and severity of the market move rather than anything specific to MICLA," said Payden & Rygel vice president Travis McGahey.

McGahey added that "September is on pace to potentially be the worst month for municipal bond performance since April 1987."

The rest of the finance team includes municipal advisor Omnicap Group LLC, bond counsel Nixon Peabody and Stradling Yocca Carlson Rauth as disclosure counsel.

Ground was broken for the convention center expansion in October 2025.

According to the preliminary official statement for the deal, the construction plan calls for the not-quite-finished project to be paused for the Olympics in July 2028.

Olympic and Paralympic events the convention center is slated to host include fencing, taekwondo, wrestling, table tennis and judo.

Final completion of the expansion is scheduled for May 2029.

McGahey said rates don't necessarily need to rally significantly to get MICLA back into the market; stability may be more important than the absolute level of yields.

"A few calmer trading sessions and some reduction in secondary selling could give investors and underwriters greater confidence around where the deal should clear," he said.

He added that the convention center project and its connection to preparations for the Olympics give the city plenty of motivation to ultimately access the market.

"The question isn't whether there's demand for $1.8 billion of California paper; it's what price clears that demand in this environment," he said.

The city council approved the $2.8 billion convention center expansion in an 11-2 vote in September 2025, amid opposition from a vocal minority.

Los Angeles Mayor Karen Bass and City Councilmember and mayoral candidate Nithya Ramen came down on opposing sides. The two go head-to-head in the mayoral race Nov. 3.

Ramen and Council member Katy Yaroslavsky, head of the council's budget committee, were the opposing votes.

Yaroslavsky had proposed a cheaper alternative proposal for the project that would have focused on repairs to the convention center, but the council declined to pursue that option.

The average annual net general fund impact over the 30-year operating period is estimated to be $89 million, in nominal dollars, according to a September 2025 report from the city administrative office.

City Controller Kenneth Mejia came out against the project with an even higher estimate, saying it would cost the city more than $100 million a year for 30 years.

Jessica Lerner contributed to this story.