The Regents of the University of California is one of the largest public university systems in the U.S. and includes: 9 general education campuses (Berkeley, Davis, Irvine, Los Angeles, Merced, Riverside, San Diego, Santa Barbara, and Santa Cruz); A health science campus (San Francisco); 6 academic health centers; and 3 national laboratories (Lawrence Berkeley, Lawrence Livermore, and Los Alamos).

UC has over 300,000 FTE undergraduate and graduate students and generates over $60bn annual operating revenues.  Proceeds from the financing were used to current refund tax-exempt bonds subject to par call, restructure maturing tax-exempt bullets, redeem taxable bonds subject to optional make-whole call redemption, redeem taxable Build America Bonds subject to extraordinary optional redemption, finance various new capital projects.

The SWS team worked with the University to implement unique structuring ideas, informed by current market environment – desire to capture relative value in a historically steep yield curve environment, multi-variable regression analysis on $11bn of UC pricing data over the past five years – analyzed the impact of maturity size on pricing results to inform optimized maturity sizing, comprehensive analyses evaluating the impact of the transaction structure on the system’s central bank cashflows and refinancing risks.

Informed by these analyses, the team structured the transaction with 11/15 maturity dates – accelerating maturities by 6 months relative to the University’s historical standard 5/15 maturity dates, generated 6bps all-in TIC savings ($20.7mm NPV debt service savings), smoothed future cashflow needs and diversified future maturity payment and refinancing dates.

A combination of annual 20-year amortization and bullets maturing in 2039 and 2041captured pockets of investor demand where most robust in the current market and diversified couponing and call structures to optimize investor participation.

The SWS team prepared an online investor roadshow that was viewed by 46 unique accounts. On the afternoon of the retail pricing day, the Department of Justice filed a lawsuit against the University of California alleging Title VII violations by UCLA. The team acted nimbly to prepare and post a supplemented POS that day. The salesforce conveyed the risk mitigating factors to investors. Resulted in less than a $3mm impact on investor orders and 119 investors submitted orders on the transaction.

Aggregate subscription of 2.7x allowed for tightening of spreads up to 10bps in certain maturities. The team underwrote balances to support pricing integrity in early maturities