Alamo Community College District
Maintenance Tax Notes, Ser 2022
August 25, 2022
The Series 2022 Notes served as SWS’ 2nd senior managed mandate for Alamo Community College District and the District’s 3rd largest ever issuance. The Notes are rated Aaa and AAA by Moody’s and S&P, respectively, and at the time of pricing the District was one of only 3 community college districts in Texas and 13 nationally with triple‐A ratings from both agencies.
The Series 2022 Notes are secured by a limited ad valorem tax on all property within the District (coterminous with Bexar County) and would provide funding to address a majority of the deferred maintenance backlog of the District. The structure would include an 8‐year final maturity (principal repayment 2023‐2030) with the first year constrained to the available M&O tax revenues and level debt service thereafter.
Volatility and rising rates would set the tone in the week(s) leading up to pricing as municipal bond market yields played “catch up” to early August Treasury moves. This included increases daily of 8‐16 bps in the first five years of the MMD curve and 2‐10 bps in later years. Several high‐grade Texas bond sales priced the third week of August would be slow to get ahead of a quickly evolving municipal bond landscape and ended up “chasing the market” by widening pricing spreads, only to underwrite sizeable unsold balances later.
SWS had been mandated to serve as the senior manager on a $266mm Del Valle ISD, TX transaction scheduled to price the day before (Wed, Aug 24th) the District’s pricing (Thu, Aug 25th). This would help determine how SWS would premarket the District’s Series 2022 Notes and afford the senior manager valuable and real‐time market intelligence (yields) and active investor interest (buyers). The pre‐marketing period was highlighted by reads from 18 potential investors, 15 of which were active participants in the DVISD transaction. By the end of the order period, the SWS ‐led syndicate would generate $913 mm in priority orders from 35 distinct investors (26 potentially new investors).
With oversubscriptions between 2.1x – 4.9x in every maturity, SWS’ underwriter recommended reducing pricing spreads by 1 to 4 bps throughout the structure. There‐pricing reduced the All‐In TIC by 3 bps to 2.67%.