The issuance represents SWS’ largest senior managed school district transaction in Texas and SWS’ third time serving as senior manager to the District.

Purpose:

Proceeds from the sale of Bonds will be used (i) to provide funds for the construction, acquisition and equipment of school buildings and the purchase of necessary sites therefore, (ii) for the refunding of certain outstanding commercial paper notes of the District, and (iii) pay for the costs of issuing the bonds. 

Structure:

The Bonds were structured as serial bonds from 2025 to 2044, and term bonds in 2049 and 2054. SWS utilized 5% coupons on the serial bonds and the 2049 term bond. The 2054 term bond was structured with a 4% coupon. The bonds carried a 9-year optional call, beginning on 2/15/2033.

Market Conditions:

The municipal market continued to experience daily volatility leading up to pricing, with daily MMD movements, including a 3 to 8-bps increase between 2027 and 2054 on the day of pricing. Investors concerns centered around Muni-to-UST ratios, with many investors finding relative value in taxable bonds over municipals given the elevated corporate IG supply. Prior to pricing, many similar PSF insured deals struggled in the market either with significant price adjustments and/or large unsold balances.

SWS Marketing:

SWS presented the District and its FAs a comprehensive marketing plan prior to pricing which included bondholder analyses, recent PSF investor buyer changes, and other relevant market information. SWS canvased investor sentiment through a bifurcated 2054 term bond, but combined the term bonds during reprice to maximize investor demand, resulting in a 3-bps yield reduction.