The GO bonds financed and refinanced various projects including: K-12 public education, public higher education, highway safety, high speed rail, clean water, flood protection, children’s hospitals, earthquake preparedness, and library construction and renovation.

SWS coordinated the development of the Investor Roadshow that was viewed by 34 investors (15 became ultimate purchasers of the GO Bonds). The GO bonds featured large maturities, particularly inside of ten years. The largest maturity was $189 million, and approximately 60% of the total par was structured within 10 years.

Given the size and demand challenges of the shorter maturities the STO and PRAG agreed with the JSM’s strategy to offer those maturities at competitive yields appropriate to generate demand and “build a book” (to avoid having to increase yields later to attract investors).

The GO bonds also included bifurcated 3%, 3.25%, and 3.5% coupons to enable lower coupon bonds to be efficiently refunded, consistent with the STO’s debt policy parameters.

MMD and UST yields both increased steadily during the week of pricing in reaction to conflicting signals from Federal Reserve officials following the recent interest rate cut about inflation, investor “pushback” on shorter muni/treasury ratio levels, and slowing growth– most of the volatility was on the front end of the yield curve. Pricing week saw relatively high issuance volume ($15+ billion) and modest fund outflows.

In the corporate market, Oracle priced the second largest bond deal of the year ($15 billion, upsized to $18 billion). Underwriters on previously priced municipal deals were reporting large unsold balances.

The retail order period commenced on Wednesday, September 24 and received $1.19 billion in retail orders (81% professional retail).

The JSMs launched the institutional order period on Thursday, September 25 and received $5.91 billion in institutional orders. The order flow represented 63 investors ranging from $5 thousand to $189 million.

The significant results enabled the JSMs to lower spreads between 1-9 basis points from the retail order period in 13 of 23 maturities. Thus, the State locked-in over $142 million in NPV savings (8.92% of refunded par).

The JSMs underwrote over $96 million of unsold balances at repricing to support the transaction. Although, by the end of the day, MMD had increased by 7-10 basis points in the underwritten bonds—the JSMs committed to further preserving attractive savings levels for the STO by limiting the yield increase in those five maturities to 1 to 3 basis points.

The successful pricing strategy also enabled the STO to take advantage of strong demand to upsize the financing by $275 million.