Bond proceeds will be used to make payments to the Pennsylvania Department of Transportation (“PennDOT”), fund necessary reserves for the bonds, and fund the capitalized interest for four years.
To inform investors about the coming transaction, SWS prepared an EMMA notice. Additionally, SWS improved and updated PTC’s investor presentation to reflect the updated T&R Revenue Bring Down Letter, COVID-19 impacts, and highlight the subordinate bond’s security features.
After a positive pre-marketing period, SWS received over 39 investor reads for the transaction. This and the stable tones in the bond markets allowed SWS to tighten the pre-pricing scale by 2 to 3 bps and utilize alternative coupons including 3%, 4% and 5% to reduce the all-in TIC and attract a wide array of investors.
The transaction received robust investor demand and after the order period, maturities were oversubscribed by 4.3x to 13.0x. Overall, the transaction received nearly $2.7 billion of priority orders and was 6.8x oversubscribed from 91 unique investors. The SWS’ sales desk received orders from 78 unique investors including over $1.0 billion of orders from 28 current PTC Subordinate bondholders.
Given the strength of the order book, SWS tightened spreads by 6 to 12 bps across all maturities exceeding the expectations of the Commission and its co-financial advisors.
SWS’ strong marketing and pricing efforts resulted in the Commission achieving an all-in TIC of 2.553% (the tightest subordinate credit spreads) and even achieved tighter credit spreads on certain maturities than the PTC’s recent Senior Lien (Series A of 2021) transaction.