Peralta Community College District
New Money & Refunding 2012 GO Refunding Bonds
October 25, 2022
BOOKRUNNING JOINT-SENIOR MANAGER
This represented SWS’ 3rd consecutive senior managed transaction for the District
The Bonds were issued to current refund outstanding bonds for debt service savings and to provide approximately $120 million for new money purposes.
SWS led the development of the rating agency and investor presentations, the content of which was overhauled by SWS for the 2022 issuance. SWS worked in close concert with the District and its Municipal Advisor to craft a nuanced narrative detailing the District’s progress with enrollment, finances, and accreditation.
Both rating agencies awarded outlook increases from “Negative” to “Stable.” The investor presentation was viewed by 27 unique investors, with 8 of those investors placing orders during pricing.
SWS provided significant structuring work to achieve numerous objectives, including maximizing refunding savings for taxpayers in a volatile market, preserving tax rate flexibility for future issuances, and complying with legal limitations on GO bond premium. The previously stabilizing municipal bond market shifted significantly when MMD increased by a novel 18 bps the Friday before pricing, after 5% coupon syndicate price views had been submitted; SWS’ underwriting desk responded by requesting syndicate and investor interest for a rewritten structure with 5.25% and 5.50% coupon term bonds.
SWS’ bankers also requested fee quotes from insurance providers during this time in search of more options for marketing the Bonds; however, SWS ultimately recommended against using insurance given the high demand from investors for the uninsured structure.
During the institutional order period, SWS’ salesforce generated $599.8 million in institutional orders from 38 unique investors (4.0x oversubscription) with potentially 29 new investors – a testament to SWS’ thorough marketing efforts, including an early EMMA notice, in the face of investor reluctance. Oversubscription allowed SWS to lower pricing spreads by 2 to 6 basis points for all maturities. The Bonds priced 7 to 18 bps lower in comparable maturities with matching coupons for a Montebello USD general obligation transaction with a similar credit story and rating (A1/AA/NR) that priced the next day.
The Bonds achieved an all-in TIC of 3.76%, and the Refunding Bonds achieved approximately $1.15 million in PV savings, or 3.44% of the refunded par. After issuing the New Money Bonds, the Measure G proforma tax rate is $18 per $100k of AV in 2023 and 2024 and ranging from $0.57 to $4.07 per $100k of AV from 2025 to the final maturity of the Measure G debt structure in 2052.