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The Parking Authority of the City of Newark



Lease Revenue Bonds, Series 2023

July 31, 2023


Image by Sam Mgrdichian

The Authority’s Inaugural Bond Issuance

The bond proceeds are being used to pay off a portion of the outstanding 2018 loan, fund a rent reserve fund and pay associated issuance costs. Underlying rating of Baa2 was affirmed by Moody’s which is the same rating as the City of Newark due to the nature of the bond pledge.

SWS Helped Navigate the Authority’s Cash Flow Structuring Constraints and Heavy New Issuance Calendar

The transaction was structured to maximize proceeds with the projected lease revenue payments from the City of Newark. To optimize bond proceeds and attract a wide investor base, SWS structured the transaction with two term bonds with 5.25% and 5.50% coupons to complement the 5.00% coupons for the serial bonds. SWS analyzed the use of bond insurance, which proved to be beneficial from both a cost and marketing perspective, and was ultimately used on the entire transaction with insured ratings of A1/AA by Moody’s and S&P, respectively.

The market in the week before pricing had a low municipal supply volume due to the FOMC meeting and the tax-exempt MMD index saw significant increases following the Fed’s decision to raise rates by another 25 basis points.

Strategic Timing and Focused Marketing Led to a Successful Pricing

Following the previous week’s FOMC meeting, SWS saw an opportunity to take advantage of investor interest and believed the transaction would give the Authority leverage if pricing was accelerated to Monday from Thursday. This was primarily due to solid investor feedback from pre-marketing and heavy calendar of new municipal issuances during the week of the Authority’s pricing. Overall, the transaction was 10.1x oversubscribed with $125 million in orders from 15 different investors. Given the strength of the order book, SWS was able to aggressively lower spreads by additional 15 basis points in the 2043 and 2051 term maturities from the pre-pricing scale.

Due to SWS’ strong marketing and pricing results, as well as the backstop of bond insurance, the Authority achieved an all-in cost of funds of 5.11% and generated $132,000 of additional proceeds to be used for the project fund due to significant reduction in borrowing costs since the initial pre-marketing levels.

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