City of Pflugerville, Texas
Municipal
$171,165,000
$74,360,000 Combination Tax and Limited Revenue Certificates of Obligation, Series 2023A (“Certificates”) $96,805,000 Limited Tax Bonds, Series 2023 (“Bonds”)
July 27, 2023
SENIOR MANAGER
Siebert Williams Shank & Co., LLC (“SWS”) served as senior manager on the City of Pflugerville, Texas (Travis and Williamson Counties, Texas) Combination Tax and Limited Revenue Certificates of Obligation, Series 2023A and Limited Tax Bonds, Series 2023 issuances.
The issuances represented SWS second consecutive senior managed mandate for the City.
Purpose:
The Certificates will be used for constructing new City public works complex for the City utility and streets. The Bonds will be used for improvement and upgrading transportation projects in the City.
Structure:
The Certificates were structured as serial bonds from 2024 to 2043 and a term bond maturing in 2053. SWS utilized 5% coupons premium bonds from 2024 through 2043 and a 4.125% discount bond in 2053. The Bonds were structured as serial bonds from 2024 to 2044 and term bonds in 2048 and 2053. SWS utilized 5% coupons from 2024 – 2041 and in terms 2048 and 2053 and 4% coupons on serials 2042 – 2044 to garner interest from a large institutional account. The Certificates and Bonds were optionally callable on 2/15/2032, representing a 9-year par call.
Market Conditions:
The overall municipal market calendar was modest with $5.6 billion in par slated for the week. However, the Texas calendar was disproportionally heavy, with $1.5 billion coming to market the day before or after the FOMC meeting on Wednesday, July 26 and then $3 billion of Texas issuance scheduled for the following week. Despite a volatile market following the FOMC meeting, the City took advantage of MMD improvements since its May issuance and successfully executed the transaction before an expected large Texas issuance the following week. As expected, the Fed delivered a 25 bps hike on Wednesday, July 26 and held firm to their data dependent rhetoric stated that additional rate hikes are possible later in the year. On the day of pricing, the treasury market saw rates increase by up to 15 bps, with the municipal bond market witnessing volatility shortly thereafter. MMD followed suit with increases of up to 12 bps.