SWS showed leadership in bringing to market the 2nd largest tax-exempt transaction to price nationally since the beginning of the municipal market dislocation on March 12th
Proceeds from the Bonds were used to reimburse up to $150 million under a school-board-approved reimbursement resolution for ongoing capital construction and finance the construction and equipping of school buildings.
The Series 2020A Bonds were structured to generate a $350 million project fund, with principal maturing serially (2021-2040), with an August 15, 2029 par call. In addition, 5% coupons were utilized in the first 13 years, 4% coupons in years 2034-2038, and 3% coupons in years 2039-2040. Citing the District’s very large and rapidly growing tax base located in the Dallas/Fort Worth metropolitan area, Moody’s and S&P assigned “Aaa/AAA” underlying ratings, respectively.
Despite being in the midst of one of the greatest economic downturns since the Great Depression spurred by the global COVID-19 pandemic, SWS, the District, and its municipal advisor judiciously brought the Series 2020A Bonds to market into what our financing team saw as a narrow window of opportunity. Originally scheduled for a pricing in late March, the unfolding volatile market events in the previous weeks forced the financing team to evaluate the market and designate the transaction as “day to day”.
After seeing a favorable trend in MMD, with interest rates falling across all maturities on the Friday and Monday before pricing (10-15 bps and 8-15 bps, respectively), SWS’ desk showed decisiveness and recommended bringing the transaction to market on Tuesday, April 7th. SWS’ team also showed leadership in bringing to market the 2nd largest tax-exempt transaction to price nationally since the beginning of the municipal market dislocation on March 12th.
On the day of pricing, the market tone showed its firmness, with orders for 66% of the transaction submitted with over an hour remaining in the order period. The transaction saw strong demand from across the investor spectrum, including bond funds, SMAs, bank portfolios, insurance companies, bank trusts, private wealth management and prop/trading accounts.
Due to an intensive multi-day marketing effort by SWS’ salesforce, the District received $1.89 billion in institutional orders from 61 institutional accounts (making the overall transaction 6.2x subscribed). At reprice, SWS’ desk recommended lowering yields across all maturities, ranging from 3 to 10 bps. The District achieved a True Interest Cost of 2.63%.