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City of San Antonio, Texas



$57,680,000 General Improvement Bonds, Ser 2022
$100,520,000 General Improvement Bonds, Taxable Ser 2022
$79,830,000 Comb. Tax and Revenue Cert. of Obligation, Ser 2022
$47,910,000 Tax Notes, Ser 2022

August 9, 2022


Image by Sam Mgrdichian

This transaction represented SWS’ 12th senior managed mandate for the City and its inaugural issuance of a historic $1.2 billion general obligation bond authorization passed in May 2022. The taxable GO bonds were issued to fund the City’s $150 million affordable housing program which required a City charter change in May 2021 to allow GO bonds to fund affordable housing. The 2022 obligations were rated Aaa/AAA/AA+ with stable outlooks. 

The GO and CO’s were structured as 20-year level debt service and tax notes with a 2-year level debt service. The 2023 maturity of the taxable GO bonds were structured with $25.4 million in bonds so that the aggregate debt service of all 2022 obligations would be below $64.2 million. This would maintain a level I&S tax rate while minimizing the overall cost of the combined financing. The Friday before the week of pricing, August 5th, the tax-exempt AAA MMD yield curve rose between 6 to 10 basis points across the yield curve and the Treasury market rose between 11 to 24 basis points throughout the yield curve – creating an inversion of the curve.

In the taxable series, State Farm was needed to help the only three lagging maturities (2035 – 2037) but required a change to the defeasance language in the official statement. In total, there were $755 million in priority orders generated for the entire transaction from 62 distinct investors. The investor base was diversified, with 13 different portfolio types, led by SMAs, Insurance Companies, and Bond Funds and included 24 potentially new investors. 

With the robust book of indications of interest for the taxable series, SWS began the price guidance by lowering pricing spreads by 2 to 10 bps on all but three maturities (2035 – 2037). For the tax-exempt maturities that were oversubscribed, SWS lowered the pricing spreads by 1 to 4 bps.

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