City of Atlanta
General Obligation Public Improvement & Various Purpose General Obligation Bonds
October 25, 2022
JOINT-BOOKRUNNING SENIOR MANAGER
The City has designated the Series 2022A-1 Bonds as Social Bonds based upon the City’s Social Bond Framework and a Second Party Opinion rendered by Morningstar Sustainalytics. For details on the Social Bond designation and marketing process for the Series 2022A-1 Bonds, please see slide two on the following page.
The Series 2022 Bonds are structured with tax-exempt serial maturities and 5% coupons. The Series 2022A-1 Bonds maturities run from 2023 to 2042 with a standard a 10-year par call. The Series 2022A-2 Bonds maturities run from 2023 to 2028, while the Series 2022B Bonds maturities run from 2023 to 2032; neither series is subject to Optional Redemption. All Series 2022 Bonds are subject to Extraordinary Optional Redemption in the event of the occurrence of deannexation events affecting portions of the City (as described in the OS under “Redemption Provisions” and “State Legislation”). In the week leading up to pricing, hawkish tone from Fed members put pressure on the market, with MMD wider by 16 to 23 bps on the week while the 30-year treasury was up by 34 bps.
During pre-marketing on October 24, treasuries and stocks were stronger, but the expected $8+ billion new issue calendar and the prior week’s MMD cuts weighed heavily on investors, with MMD cutting an additional 5 to 7 bps. Low investor appetite for sub-5% coupons on the Series 2022A-1 2038 and 2042 maturities during pre-marketing resulted low 4-handles eventually being changed to 5%. Though market volatility and mixed investor feedback caused other same-day transactions to widen spreads, the joint-bookrunners recommended entering the order period holding the pre-marketing levels, given the strong City brand and credit. Despite the challenging environment, the transaction garnered $1.1 billion in priority orders from 50 different investors (2.69x oversubscription) - 41 of which did not previously report City holdings.
At re-pricing, spreads were tightened by 3-5 bps for the 2023 – 2037 maturities across all three series. The Series 2022A-1 Bonds achieved an All-in TIC of 4.27%, the Series 2022A-2 Bonds achieved an All-in TIC of 3.45%, and the Series 2022B Bonds achieved an All-in TIC of 3.56%.