SAN FRANCISCO Fresh from receiving its third gilt-edged issuer rating this week, Manhattan Beach, Calif., prices $13 million in certificates of participation today.
Moodys Investors Service, in its first rating of the citys credit, assigned the Aaa rating to Manhattan Beach Monday, as well as assigning the Aa2 underlying rating to the COPs.
The positive issuer rating reflects the citys wealth and sound management, said Moodys analyst Dari Barzel.
The uniqueness of Manhattan Beach is the financial flexibility which derives from the extraordinary fund balances theyve managed to accumulate through decades of conservative financial management, she said.
The 3.9-square mile city of 36,000 joins Palo Alto and Santa Monica as the only California cities with a natural Aaa rating from Moodys.
Both Fitch Ratings and Standard & Poors affirmed outstanding AAA ratings for the city and assigned AA-plus ratings to this weeks COP deal.
For Moodys to come out in this environment to put a triple-A on a California city is pretty remarkable, said Mark Young of Gardner, Underwood & Bacon LLC, the citys financial adviser.
Many California cities are cutting back in the wake of a state budget crisis that has led state government to raid local revenue sources.
Manhattan Beachs finance director, Bruce Moe, said the city has built up its reserves with decades of budget surpluses.
Typically we cash-fund all our [capital] projects, Moe said.
The proceeds will help finance new police and fire headquarters for the city.
In this case its a $40 million project and we had $28 million in cash set aside, he said. Its just our approach to the way we do things.
The city has no further bond plans, Moe said.
The deal is led by UBS Financial Services. Hawkins Delafield & Wood LLP is bond counsel. Todays pricing follows a two-day retail order period.
In early 2003, the city sold $13.4 million in COPs to finance a parking garage.
Young said the deal is likely to carry insurance from Ambac Assurance Corp. in all but the earliest maturities.
The last time we went around insurance didnt pencil, Young said. Were in a little bit different market environment, adding that low rates mean there is little retail interest in longer maturities.
Its probably easier to underwrite a bond that has strong underlying fundamentals but is insured, he said.
