Woman and minority owned investment firm leads underwriting
91制片厂 sold bonds last week for the second phase of the 2019 Bond program and locked in historically low interest rates that will give the district a significant cost savings.
The $996 million 2019 Bond program, approved by voters in November 2019, is divided into five phases. Last February, the district sold $311 million in bonds for phase one.
This year, on Feb. 3, the second phase of bonds was sold to fund $194.4 million of project costs. Of that, $168.4 million will go to facilities construction and improvement, and the remainder will fund technology, fine arts equipment and transportation vehicles.
鈥淚 think it was an outstanding sale,鈥 said 91制片厂 chief financial officer Darla Moss. 鈥淚t鈥檚 one of the best rates that 91制片厂 has ever had.鈥
The district achieved an effective interest rate on this bond issue of 2.234 percent. That is significantly lower than the 4.75 percent interest rate projected and used in models to put the original bond package together. The difference will mean a significant cost savings as the district鈥檚 interest payments on this debt will be lower than anticipated.
鈥淚nterest rates on tax-exempt municipal bonds are at historically low levels,鈥 said George Williford of Hilltop Securities, the 91制片厂鈥檚 financial advisor. 鈥淭he most recent weekly Bond Buyer index was only 5 basis points or .05% above the all-time low index rate.鈥澛
The sale and interest rate were also aided by demand due to the district鈥檚 strong financial reputation. 91制片厂 has very strong credit scores (Moody鈥檚 Report,听S&P Credit Rating), and all Texas school district bonds are guaranteed by Texas鈥櫬, which has the highest possible credit rating.
鈥淚nvestor demand on the issue was so great that it enabled interest rates to be reduced prior to finalizing the rate for the issue,鈥 Williford said.
Another reason for the successful sale was the five underwriters.
鈥淢arket conditions were outstanding, and our underwriters did very well for us,鈥 Moss said.
For the first time, 91制片厂 selected a minority-owned underwriter as the lead. Siebert Williams Shank, the top-ranked woman and minority owned investment banking firm in the nation, had served as an underwriter for the district before, but not as the lead.
鈥淲e are pleased with our decision to hire Siebert Williams Shank as lead manager, not only because it affirms our commitment to diversity and inclusion, but Siebert Williams Shank demonstrated an impeccable ability to market and sell the district鈥檚 bonds to achieve historically low interest rates on behalf of the 91制片厂 taxpayers,鈥 Moss said.
Since its inception in 1996, Siebert Williams Shank has managed over $1.4 trillion of municipal bonds and has earned national recognition for its extensive senior and co-managed municipal bond underwriting experience and expertise. In the last five years, the firm has participated in over 2,000 municipal financings, leading over 200 of those for about $30 billion.