State of Oregon
General Obligation Bonds, Various Series
May 10, 2022
This transaction marked the first time SWS served the State of Oregon as Joint-Senior Manager.
Proceeds of the Bonds were used tofinance all or a portion of the costs of various State projects, and to pay costs of issuing the Bonds. The Bonds are direct general obligations of the State, and the full faith and credit and taxing power of the State are pledged to pay the principal of and interest on the Bonds when due, except the ad valorem taxing power of the State is not pledged to pay the Bonds. As Joint-Senior Manager, SWS developed the rating agency presentations for the State’s meetings with Moody’s, S&P and Fitch.
The market was somewhat volatile leading up to the day of pricing with municipal supply for the week of May 9 totaling $10.5 billion, including $6.5 billion in tax-exempt supply and $4.0 billion in taxable supply. On the day of pricing, 10 and 30-year “AAA” MMD rates were 2.88% and 3.21%, respectively, while the 10 and 30-year US Treasury rates were 2.99% and 3.12%, respectively.
The POS and slides-only investor presentation were posted one week prior to pricing. The POS and roadshow were viewed by 32 investors. The Bonds were premarketed beginning on Friday, May 6 with indications of interest for the taxable 2022 Series B Bonds taking place on Monday, May 9.
The Tax-Exempt Series 2022 A&C Bonds attracted broad investor demand resulting in pricing spreads tightening across the yield curve as much as 6 bps. Given strong investor interest for the Taxable Series 2022 B Bonds, spreads were tightened by 20 bps in 2023, 15 bps in 2024-2028, 8 bps in 2029 and up to 5 bps in 2030-2042.
These tighter spreads were achieved with a mostly steady tone in the tax-exempt market with MMD unchanged from 2023-2052 and the taxable market saw lower yields on the day with 10-year Treasury rates decreasing 6 bps and 30-year Treasury rates decreasing 7 bps. At the end of the order period, there were more than $625 million of orders from 40 different institutional investors for the Tax-Exempt Series 2022 A&C Bonds and approximately $560 million of orders from 55 different institutional investors for the Taxable Series 2022 B Bonds.
The Tax-Exempt Series 2022 A&C Bonds were oversubscribed by 3.0x and 1.5x, respectively and the Taxable 2022 B Bonds were oversubscribed by 3.2x. The smoothly executed transaction resulted in an overall All-In TIC of 3.92% with an average life of 11.38 years. SWS brought new investors to the State’s transaction including the Los Angeles Department of Water and Power and PFM Asset Management.