School District of the City of Detroit (MI)
2020 Refunding Bonds, Series A (Unlimited Tax General Obligation)
May 13, 2020
The Bonds were rated “AA” by S&P based on the District’s participation in the Michigan School Bond Qualification and Loan Program. Proceeds were used to refund the School District’s outstanding School Building and Site Bonds, Taxable Build America Bonds, Series 2010B (UTGO).
The transaction was structured with serial bonds maturing 2030 to 2040 with a 10-year par call and 5% coupons throughout the curve in order to retain the bonds future optionality. SWS strategically developed the investor presentation to educate investors on the legal framework between Detroit Public Schools and the Detroit Community School District; and convey the credit strengths and mechanics of the Michigan School Bond Qualification and Loan Program.
Despite being in the midst of one of the greatest economic downturns and market disruptions since the Great Depression caused by the global COVID-19 pandemic, SWS worked closely and diligently with the District and its municipal advisor to monitor market conditions and seek an advantageous window of opportunity to price the transaction.
As a result of SWS’ extensive pre-marketing and sales efforts, the transaction garnered $138 million in total orders from 8 different institutional investors resulting in an aggregate oversubscription of 3.6x and 2.3x to 4.6x based on priority orders (all priority orders derived from SWS). At repricing, SWS’ desk recommended lowering yields across all maturities including 2 bps in 2030, 3 bps in 2031 and 5 bps from 2032 to 2040. The District achieved approximately $8.5 million of PV savings or 17.20% of the refunded bonds, and an all-in TIC of 3.12%.