This was SWS’ second consecutive senior managed mandate for the District
The Series 2020 issuance represents the remaining authorization stemming from the $40 million 2018 bond election, the largest in the District’s history, focusing on projects aiming to stem declining enrollment that peaked in 2012. Proceeds from the Bonds will go to fund the construction of a performing arts center, an aquatics center / natatorium, and multi-purpose athletic facility, all firsts for the District.
The bonds were structured with minimal debt service through 2025 and level debt service thereafter, a final maturity of 2045, and a 9-year par call. Citing stable operations and maintenance of very strong reserves, S&P assigned an underlying rating of “A” to the District. The Series 2020 bonds, backed by the Permanent School Fund, are rated “AAA” (S&P).
The week leading up to pricing would be steady for municipal bonds as ongoing demand would handle a robust calendar ($7.9 billion) and benefit from an initial flight to quality as fears of the pneumonia-like Coronavirus began to affect equity markets. Off the heels of 58 consecutive weeks of mutual fund inflows, the negotiated calendar for the holiday-shortened week of pricing would be below average. SWS worked with the District and their advisors to facilitate a Tuesday pricing, coinciding with the District’s regularly scheduled Board of Trustees meeting. A later (and longer) order period would help ensure the attention of institutional investors as portfolio managers settled in from the three-day weekend.
SWS’ desk generated over $13.8 million in institutional orders with bonds maturing 2027 – 2030 and 2045 2x – 6x oversubscribed. This allowed our underwriter to tighten spreads by 2 – 4 basis points in 2028 – 2030. In order to maintain pricing levels, SWS would underwrite $200,000 in unsold bonds, representing the 2021 and 2022 maturities, and the successful pricing would translate to an All-In TIC of 2.47% for the District.