Extreme market volatility in the weeks leading up to the pricing created tremendous uncertainty in the market and made investors reluctant to commit and take risk. 

The overall GLWA Series 2022 bond structures were intricate and intertwined, with two separate credits (Water and Sewer), and a Senior Lien and Second Lien Series on each, all priced simultaneously and with overlapping maturities. Despite a robust book of orders from a wide variety of investors, the tight pricing levels established by SWS resulted in unsold balances of approximately $100 million at the end of the institutional order period. 

Ordinarily, balances of this size would require a substantial repricing and affect a wide range of maturities; however, a repricing of any maturity on this offering would have had a substantial ripple effect throughout the curve based on the pricing inter-relation and relationships between Water/Sewer/Senior/Second Series overlapping maturities all being priced simultaneously. As an alternative to a broad repricing, SWS instead proposed to hold prices on all maturities at the end of the institutional order period and restructure maturity amounts in a manner designed to move bonds into maturities and series that had oversubscriptions.

SWS ultimately proposed moving $66.5 million in unsold Second Lien balances into corresponding Senior Lien maturities where there were oversubscriptions; we also proposed moving and underwriting $18.98 million in unsold 2052 Water System balances into an existing 2035 maturity and a new 2036 maturity where we had indication of demand, and we then agreed to underwrite the remaining unsold balance of $18.72 million of the Sewer System’s Second Lien 2047 and 2052 Term bonds. In aggregate, SWS underwrote $37.05 million.