The California State Treasurer’s Office (STO) and Public Works Board (SPWB) Were Able to Accelerate Pricing on this Important Financing and Lock-in Over $120 Million in NPV Savings in a Period of Near Record Bond Issuance Volume.

Market Conditions and Pricing Strategy

Following the Fed’s recent 50 basis points rate cut, the $795 million SPWB Lease Revenue Refunding Bonds (Aa3/A+/AA-) were scheduled to price in a week with expected near-record issuance volume (projected at $15 billion).  SWS recommended accelerating the retail order period (ROP) to Monday to be the first prominent bond offering of the week.  SWS also recommended retaining the flexibility to accelerate the Institutional Order Period (IOP) to Monday. Based on actionable indications SWS received from investors, the STO and SPWB agreed with SWS’ recommendation to also accelerate the IOP to Monday.

Pricing Performance and Results

Overall, SWS generated over $3.67 billion in orders (ranging from $250 thousand to $350 million per investor), enabling yield spreads to be reduced by 3-10 basis points in 2027 and 2029-2039 (the final maturity). SWS collaborated closely with the STO, SPWB, Municipal Advisor and Bond Counsel to structure the bonds, efficiently utilize existing funds, and to optimize the refunding escrow--generating over $4 million in positive arbitrage earnings.

Thus, the STO and SPWB locked-in over $120 million in NPV savings and achieved pricing spreads that were 1-9 basis points lower than the recently issued and higher rated California General Obligation (GO) bonds.

Conclusion

SWS was honored to serve to serve the State Treasurer’s Office and State Public Works Board as Book-Running Joint Senior Manager. This important financing enabled the State to generate significant lease savings for essential facilities and is an excellent example of the unique value that SWS delivers as a Book-Running Senior Manager.