The Illinois State Toll Highway Authority
Toll Highway Senior Revenue Bonds, 2020 Series A
December 1, 2020
The Authority received $1.99 billion in institutional orders (4.0x oversubscribed) from 44 institutional accounts
The 2020 Series A Bonds were issued to finance the costs of capital improvements to be made to the Tollway System as part of the “Move Illinois” Program. The 2020 Series A Bonds were structured with principal maturing serially from 2036 through 2041 and a term bond maturing in 2045, and a par call on January 1, 2031. Moody’s, S&P, and Fitch affirmed the Authority’s ratings at “A1/AA-/AA-”, respectively, each with a negative outlook. The negative outlooks were due to concerns relating to the COVID-19 pandemic.
The morning of pricing, MMD was stable, despite yields in the Treasury market being 4-6 bps higher. Initial muni trading did look to indicate a slightly better bias up and down the yield curve, as participants put December redemption/coupon cash to work. There was a risk-on sentiment in the equity market due to vaccine hopes, a resumption of coronavirus aid talks, and Janet Yellen’s nomination for Treasury Secretary. The first MMD read was unchanged.
The POS and slides-only investor presentation were posted almost 2 weeks prior to pricing due to the Thanksgiving holiday. The roadshow was viewed by 33 unique investors. The financing team also made time available for one-on-one calls with investors. The transaction was met by strong demand from across the investor spectrum, including bond funds, prop/trading accounts, hedge funds, SMAs, bank portfolios, insurance, and money managers.
Given the oversubscription levels, SWS recommended aggressive tightening of spreads by 5 to 6 bps, helping the Authority to achieve a True Interest Cost of 3.16% (average life of 21.72 years)
Despite the pandemic, SWS’ performance resulted in pricing levels in line with the Authority’s last pre-pandemic long term financing, the 2019 Series A Bonds.