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San Antonio Independent School District (TX)



Unlimited Tax School Building and Refunding Bonds Series 2019

June 23, 2019


Image by Sam Mgrdichian

San Antonio ISD high-school students attend “Municipal Finance 101” presentation to learn about the District’s transaction

Siebert Cisneros Shank served as the book-running senior manager for the San Antonio Independent School District’s Unlimited Tax School Building and Refunding Bonds, Series 2019 which priced on Tuesday, July 23, 2019.

The Series 2019 transaction represented SCS’ first senior-managed mandate for the District and the largest Texas K-12 transaction in the Firm’s history.

After having served as a co-manager on four prior District transactions, including outsized performance on the Series 2018 issuance, SCS was awarded the role of senior manager for the Series 2019 Bonds following months-long dedicated and concerted banking coverage that culminated in an RFP.


The new money component of the Bonds is being used to finance $200 million in projects identified in the “Bond 2016” program, including extensive renovations at seven high schools, three middle schools and three elementary schools throughout the District. The refunding portion will be used to advance refund the District’s outstanding Unlimited Tax School Building Taxable Series 2010B Build America Bonds.

Citing the District’s large tax base, broad local economy and overall stability coupled by sound operating performance and solid expenditure flexibility, Moody’s and Fitch rated the Bonds “Aa2” and “AA”, respectively. The Bonds are further guaranteed by the Texas Permanent School Fund and carry enhanced ratings of “Aaa” and “AAA”.

Pricing Strategy

Treasury rates had been marked by increased volatility in the week or so prior to pricing, led by the ebb and flow of global storylines surrounding US-China trade, Brexit, and Gulf tensions. A robust $5.1 billion negotiated calendar set for the week of pricing included $1.4 billion in Texas supply.

Working closely with the District and its Advisors, SCS’ sought price views that included various coupon structures, including 3%, 4%, and 5% bonds. Duration–averse (i.e. high coupon-only) investors such as banks and trusts joined nominal yield players in lower coupon maturities, and feedback from institutional clients was positive as a structure with sub-5% bonds past 13 years and a 3% term bond began to take shape.

On the day of pricing, SCS’ underwriting desk proposed one coupon change (from 3% to 4% in 2040) and, in order to maximize investor interest in the longer part of the curve, widening spreads 1 – 3 basis points in 2041 – 44 and the 2049 term bond.

Members of the finance team, led by SCS and the District’s financial advisor, conducted a Municipal Finance 101 presentation with over 30 District students participating, representing 11 high schools.

SCS’ sales desk generated over $618 million in institutional orders (2.15x oversubscribed), allowing our underwriter to recommend lowering yields from 2 to 4 basis points in 2021 – 26 maturities, 1 basis point from 2029 – 32, and 1 to 2 basis points 2040 – 49. In addition, SCS would underwrite $8.44 million of bonds maturing in 2028 at the initial pre-pricing level (no increase in yield).

Pricing Results

SCS’ aggressive pricing strategy and successful marketing efforts resulted in the District securing yields 1 to 3 basis points lower than that of Fort Bend ISD (which also priced July 23rd) in 12 of the 14 maturities with the same coupon structure, a remarkable feat given FBISD’s higher rating (AA+ by S&P and Fitch).

The District generated approximately $12.6 million in NPV savings (10.2% of refunded par) on the refunding with an all-in TIC of 2.896%.

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