San Francisco plans to sell $145 million of variable-rate convention center debt next Wednesday.
The lease-backed debt is being sold via the San Francisco City and County
Finance Corp. and will complete the city’s restructuring of its insured variable-rate demand obligations.
The new debt will be backed by direct-pay letters of credit from Bank of America NA and State Street Bank & Trust Co. It refunds Ambac Assurance Corp.-insured debt that saw a spike in rates after the insurer lost its triple-A credit ratings earlier this year.
San Francisco received the final ratings on the refunding this week.
It is rated AAA by Standard & Poor’s, AA-plus by Fitch Ratings, and Aaa by Moody’s Investors Service based on the combined strength of the city and its letter of credit banks. The VRDOs received underlying ratings of Aa3 from Moody’s, A-plus from Fitch, and AA-minus from Standard & Poor’s.
The new debt will refinance debt sold to fund construction of the western annex of the George R. Moscone Convention Center. San Francisco voters approved a two percentage point increase in hotel taxes to fund the expansion in 1998, though the revenues are not directly pledged to pay debt service.
“As a highly flexible facility in a city with strong convention/exhibit demand, the Moscone West facility has been very successful,” said Moody’s analysts Eric Hoffman and Dari Barzel.
Moody’s rated the underlying credit just one notch below the city’s general obligation bonds — rather than the usual two-notch distinction — because of “the voter-approved nature of the Moscone West financing and the important function that the convention center plays in San Francisco’s tourist economy.”
The underwriters of the debt are De La Rosa & Co. and Banc of America Securities. The financial adviser is Kitahaka & Co. of San Francisco.