This was SWS’ third senior managed mandate for the District

Proceeds from the Bonds will fund the continuation of projects voters approved in the 2018 bond election, including the construction of new school facilities for growth-related purposes and the purchase of buses and technology.

The Bonds were structured as 30-year fixed-rate debt (serial bonds in 2021-2042 and term bonds in 2045 and 2050) with a 9-year call option at par and level debt service. Additionally, a mixed couponing structure utilizing 2%, 3%, 4% and 5% coupons was tailored to elicit the greatest demand possible from investors looking for lower coupons. The Bonds received an S&P “AAA” rating and a Fitch “AAA” rating by virtue of a guarantee by the Permanent School Fund of the State of Texas. The District’s underlying ratings were “AA+” by S&P and “AA+” by Fitch.

The District entered a very favorable market with tax-exempt bond yields reaching new all-time lows on the Friday prior to pricing. The 5, 10, 15, 20, 25 and 30 year MMD AAA GO rates reached lows that even surpassed the March 9th lows achieved just before the coronavirus pandemic brought the market to an abrupt halt. Additionally, the confluence of a very manageable primary supply calendar, 12 weeks of consecutive bond fund inflows, significantly high national and Texas cash flows coming back to investors in the month of August from bonds maturing or redeemed provided the District substantial leverage during premarketing.

On the day of pricing, the District maintained its couponing flexibility as it released its preliminary pricing wire by replacing 5% coupons with 4% coupons on the front end and switching the initial 3% coupon in 2050 to a 4% coupon after receiving promising investor feedback. As the order period began, the District benefitted from a very robust tone in the market with orders for 85% of the par amount within the first thirty minutes.

At the conclusion of the order period, the SWS-led syndicate generated $505.6 million in institutional orders from 59 distinct investors. Overall, the transaction was 4.9 oversubscribed which allowed SWS’ underwriter to propose lowering yields from 1 to 8 bps. The District achieved an All-In TIC of 2.404%.