Tarrant County Hospital District (d/b/a JPS Health Network)
Limited Tax Bonds, Series 2023
February 28, 2023
SENIOR MANAGER (BOOKRUNNER)
The Series 2023 Bonds are the first installment sale of a total of $800 million voter authorized general obligation bonds approved at an election held on November 8, 2018. The proceeds will be used to fund the construction of several new facilities including a new psychiatric emergency center, medical home, medical office building, and a central utility plant, along with additional parking and expansion of the existing patient pavilion.
The Series 2023 Bonds are tax-exempt and structured as fixed-rate serial bonds maturing in years 2024-2040, a term bond in 2043 and bifurcated term bonds in 2048 and 2053. The Bonds are optionally callable at par beginning on 8/15/2032. The District received ratings of Aa1 (stable outlook) by Moody’s, AA (stable outlook) by Fitch and AAA (stable outlook) by Kroll.
SWS prepared an investor roadshow for the District, which received 68 investor views. The market was unstable for the originally planned pricing week for the District (Feb. 16th pricing). While CPI released on Tuesday, February 14th indicated that inflation had cooled to 6.4% in January (a decrease from December’s 6.5%), this still surpassed market estimates for the month. PPI came in higher than expected as well. Despite this improvement, MMD struggled, posting cuts (increases in yield) every day ranging from 2 to 15 basis points, with the front of the curve being the most heavily impacted. Munis had been slow to adjust to rising Treasury yield over the prior weeks. As a result of the difficult market conditions, many transactions, including the District’s, either required severe downsizing in order to get done or were pulled from the market entirely.
Despite the volatility, SWS underwriting desk remained flexible and coordinated with the FA and the District to monitor market conditions day to day in order to strategically decide on the most opportune time to bring the transaction back to the market. Yields continued to move higher for the week of February 20th and while the municipal calendar was light, transactions had mixed results as some continued to struggle. SWS continued to work accounts and received valuable feedback and gather investor reads. A pricing date of Tuesday, February 28th was chosen. Stability returned to the municipal market on the day of pricing, as investors who had been sitting on the sidelines in the weeks prior were drawn into the transaction. SWS in consultation with the District’s FA, bifurcated the 2053 term bond by adding a 5.25% coupon in order to preserve additional call optionality. The SWS-led syndicate generated over $2.7 billion orders from 106 distinct institutional investor accounts.
Overall, the transaction was 6.2x oversubscribed on a priority basis with some maturities being over 10x oversubscribed and achieving oversubscription in all maturities. At reprice, SWS’ underwriting desk proposed lowering yields on all maturities except in maturity 2029 by a range of 1 to 10 bps
The District achieved an All-in TIC of 4.431%.