St. Louis Municipal Finance Corp
Leasehold Revenue Bonds Series 2020 (Convention Center Expansion and Improvement Projects)
October 14, 2020
The Series 2020 Bonds were priced on October 14, 2020 to pay the costs of the Series 2020 Project, pay capitalized interest on the Series 2020 Bonds, fund a DSRF or the purchase of credit enhancement on the Bonds, and pay costs of issuance in connection with the issuance and sale of the Bonds. This was the third Convention Center financing that SWS has senior managed for the City of St. Louis since 2015.
The project is a major redesign and modernization of the 43-year-old Cervantes Convention Center to enhance the Cervantes Convention Center’s and America’s Center competitiveness with convention facilities in other parts of the nation. S&P assigned the Bonds a ratings of “A” with a negative outlook. The negative outlook is due to concerns relating to the COVID-19 pandemic and its effects on the tourism sector. Assured Guaranty bond insurance was utilized to secure insured ratings of A2 (Moody’s) / AA (S&P) / AA+ (Kroll), all with a stable outlook. Bonds were structured with 5% coupons as term bonds in 2040, 2045 and 2049.
On day of pricing, tax-exempt bonds chopped sideways amid mixed trading on Wednesday as both stocks and treasuries continued to vacillate on the latest coronavirus stimulus headlines out of Washington. Meanwhile, the week’s $15bn in tax-exempt & taxable primary supply was fully underway with various deals of all sizes and credits. In the backdrop, all three major US stock indexes were trading in the red by the early afternoon after the Treasury Secretary weakened the idea of getting a stimulus package done prior to the November presidential election.
The POS and a slides-only investor roadshow were posted almost two weeks prior to pricing. With a large expected new issue calendar for the week of October 12th, SWS recommended pre-marketing the transaction on Tuesday after the long weekend and price early on Wednesday morning in order to get in the market early and solidify investor interest. 35 unique investors viewed the investor presentation, 11 of which submitted orders.
SWS generated over $348.43 million in priority orders from 18 different investors (3.5x oversubscription). At re-pricing, SWS tightened spreads an additional 5 bps for all three term bonds. The successful sale allowed the Convention Center to increase proceeds for projects, provide for an increase in jobs and to add value to an asset which is part of the economic fabric of the City. Final pricing spreads were lower by 25-30 bps compared to the syndicate’s consensus levels; Achieved an all-in TIC of 4.09% (avg. life of 24.42 yrs).