With tax-exempt interest rates still near their all-time lows as well as a very favorable market environment for issuers, the State decided to lock-in refunding savings by pricing the Bonds approximately 4.5 months before closing on September 2, 2021, utilizing a forward delivery contract. The Bonds were rated Aa2/AA-/AA by Moody’s, Standard & Poor’s and Fitch, respectively.
SWS prepared an investor presentation for the sale that highlighted the State’s fiscal strength despite the impact of the COVID-19 pandemic. The investor presentation was viewed by 20 unique investors, 65% of which submitted orders.
While the duration between pricing and closing was approximately 4.5 months, SWS worked with the underwriting team to market the Bonds as a 4-month forward. SWS and the syndicate began pre-marketing the transaction on April 19th and received interest for approximately $600 million. On April 20th, the pricing period opened with spreads of +20 to +40 basis points compared to the AAA MMD yield curve with maturities ranging from 2022 to 2041. By the end of the order period, $5.0 billion of priority orders had been submitted by 43 investors, which allowed spreads to be lowered by 1 to 5 basis points in all but one maturity.
Due to the strong marketing effort and favorable primary market environment, the State locked-in $369.2 million of PV savings, or 27.4% of refunded par. All-in TIC = 2.07%, average life = 10.1 years.