The City of Los Angeles Department of Water and Power (LADWP) is offering $400 million in Water System Revenue Bonds, Series A, with bids for the competitive bond sale scheduled for August 27, 2026. This comes after a major water main break on Sunset Boulevard in West Hollywood on July 24, 2026, which involved roughly 17 million gallons of water and caused significant damage, closing a stretch of the boulevard for repairs. The ruptured 1916 pipe, part of the 10-mile Sunset Trunk Line, had already been slated for replacement, a project now accelerated from 2031 to an earlier, unspecified start date, with construction expected to last approximately four years.
This bond sale follows a period of financial scrutiny for LADWP. The utility also plans to price $993 million in power system revenue bonds next week, dealing with the aftermath of January's deadly Palisades wildfire, which led to a downgrade from S&P Global Ratings and a negative outlook from Fitch Ratings on its power and water revenue bonds due to lawsuit risks and capital improvement costs. The power enterprise's five-year capital improvement program for fiscal years 2025-2029 is substantial at $14.3 billion, with $6 billion allocated for system reliability, $2.6 billion for power resource investments, and $2 billion for existing system improvements.
Despite these challenges, some analysts view the situation as a "buying opportunity" for investors if the bonds are offered at wider spreads, given the rarity of higher yields in California. LADWP has stated that its leak rate is 36% below the national average, averaging 16.1 leaks per 100 miles of pipe compared to 25 leaks nationwide. The utility replaced over 246,000 feet of water pipeline in 2024 and 2025 and aims to replace another 246,000 feet this year. The agency has acknowledged that it will likely have to pay a wider spread on its upcoming bond sales.
