State of Oregon
$140 million Tax-exempt 2023 Series J and $18 million Taxable 2023 Series K (Article XI-Q) General Obligation Bonds
October 31, 2023
BOOK-RUNNING JOINT SENIOR MANAGER
This engagement represented SWS’ first book-running senior managed transaction for the Oregon State Treasury (“OST”). State of Oregon Accelerates General Obligation Bond Financing to Take Advantage of a Unique Market Opportunity.
The bonds funded various technology, safety, facility, and energy-related projects.
Market Conditions and Transaction Strategy Highlights:
Due to geopolitical conflicts, impasse in Washington (related to House Speaker voting indecision), uncertainty regarding possible FOMC actions, continued fund outflows, and increased municipal supply, the market experienced ongoing volatility.
In particular, a significant volume of financings were scheduled to price during the week of November 6th, to steer clear of the November 1st FOMC meeting. The State’s GO Bonds were also initially scheduled to price during the week of November 6th. However, OST, SWS, and the MA collaborated on a strategy to evaluate, as a de-risking strategy, the relative merits of pricing during the week of October 30th. Among other factors, the primary risk was the potential for an FOMC rate increase (in addition to the possibility of the US Treasury needing to increase borrowing in the near-term).
SWS provided the OST with on-going market updates including data-driven insights regarding the probability of a rate increase.
Pricing Performance and Results
Due to the anticipatory strategic approach, excellent credit attributes, and SWS’ extensive investor relationships, OST had the agility to accelerate the pricing. SWS recommended, and OST agreed, to price the GO bonds on October 31st, subject to opening market conditions.
SWS generated over $955 million retail and institutional orders, including 20 new investors (who are not reported holders), on both tax-exempt and taxable bonds, with subscription levels of tax-exempt bonds ranging from 1.7x to 10.9x.
As a result of this exceptional generated demand, SWS was able to decrease spreads by up to 11 basis points on the longer tax-exempt maturities.
SWS was honored to have led this important financing and to execute the successful strategy for the State and its stakeholders.