DASNY SUNY Dormitory Facilities (NY)
Dormitory Facilities Revenue Bonds, Series 2020A (Taxable)
July 13, 2020
Proceeds of the issue were used to provide temporary debt service relief to SUNY by refunding all of the debt service due and payable in SUNY Fiscal Years 2021 and 2022 on the outstanding Bonds and Prior Bonds previously issued by DASNY for SUNY Dormitory Facilities.
SWS worked closely with DASNY and SUNY evaluating various structuring alternatives to address potential reductions in Dormitory Revenues as a result of COVID-19 related reduced occupancy. The final structure consisted of federally taxable fixed-rate serial bonds maturing between 2026 and 2035, and a term bond maturing in 2040. The restructuring provided SUNY with $303 million of near-term debt service relief in FY 2021 and 2022. SWS also assisted with revamping SUNY’s investor presentation, which included their response to the COVID-19 pandemic, provided an overview of the University System and Residence Hall Program and addressed other key topics. The presentation received 152 views.
Pressures from the COVID-19 pandemic continued to threaten the higher education sector, with negative rating agency outlooks given to many colleges and universities nationwide. Despite these pressures, SUNY and the working group were able to maintain SUNY’s ratings and stable outlooks. In the weeks leading up to pricing, the Treasury market remained relatively stable. The week of July 13th was one of the largest calendars in the State of New York year-to-date, with approximately $4.0 billion of the nation’s $10.0 billion supply from New York issuers.
Aggressive pricing levels offered during the Indications of Interest period combined with the syndicate’s strong pre-marketing efforts led to a successful pricing of low interest rates for SUNY. Investors placed a total of $821.2 million in orders during the IOI, resulting in 2.50x oversubscription. Demand was strong across the curve; as much as 4.50x in 2026, 4.00x in 2027, 3.81x in 2028 and nearly 3.00x in 2040. With Treasuries opening up stronger the morning of Price Guidance, spreads were tightened by 2-5 bps for the serial maturities between 2026-2030 and 2035 and for the 2040 term bond. During the Launch, spreads were tightened an additional 2-5 bps, leading to an overall book of $840.4 million orders (2.54x oversubscribed) from 51 unique investors.