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Texas Public Finance Authority



Lease Revenue and Refunding Bonds (Texas Facilities Commission), Taxable Series 2020

December 10, 2020


Image by Sam Mgrdichian

The transaction was the largest by the State of Texas to be led by an MWBE firm

Proceeds of the Taxable Series 2020 will be used to refund outstanding commercial paper notes issued to help finance various projects in the Texas government capitol complex, to finance additional costs of those projects, and to pay the costs of issuance. The Bonds are secured from rent payments made pursuant a lease agreement between TPFA and the Texas Facilities Commission (TFC, lessee agency). The lessee makes rental payments to the TPFA that are derived from biennial appropriations made by the state legislature.

The Bonds are taxable and structured as fixed-rate serial bonds maturing in years 2022-2041 with level principal amortization and an optional call date at par of 2/1/2031. The Bonds received ratings of Aa1 (stable) and AA+ (stable) by Moody’s and S&P, respectively. The Authority’s issuance benefitted from a stable and steady market as the bid for treasuries was bolstered by a successful 30-yr bond auction and further supported by the news that congressional leaders were informed that a $908 billion stimulus proposal would not come to fruition. The 10-yr and 30-yr Treasuries saw their yields fall from the previous day by 3 bps and 4 bps, respectively. The Authority also benefitted from its marquee name and ratings, with the deal calendar listing the Authority’s issuance as the largest high-grade taxable negotiated transaction for the week.

The Authority’s transaction was received favorably by investors, with the SWS-led syndicate generating $2.22 billion in institutional orders from 64 different investors. The overall subscription level reached 5.6x. At launch, our underwriting desk recommended reducing spreads by 5bps in all maturities except 2022. The District achieved an All-in TIC of 1.96.

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