CA State Public Works Board, 2014B, C

California State Public Works Board
Lease Revenue Bonds, 2014 Series B & C

A marketing strategy designed to deal with a volatile market led to favorable pricing for California State

Siebert Brandford Shank served as the book-running joint-senior manager for the California State Public Works Board’s Lease Revenue Bonds which priced in early April 2014. The Bonds financed a new courthouse and various correctional facilities.

Despite being a smaller and more difficult-to-sell deal due to more series, this transaction priced at much lower spreads than a SPWB deal (same rating/credit) which priced two weeks earlier.

Despite the uncertainty in the market on the day of pricing in anticipation of the FOMC minutes, the syndicate generated over $250 million of orders during the professional retail order period—with 72% generated by Siebert Brandford Shank. Given the strong demand during the professional retail order period, there was discussion of accelerating the institutional sale period. We advised against accelerating the institutional pricing so the SPWB could benefit from the expected 1 to 3 basis-point bump in “AAA” MMD yield expected at the end of the day. This strategy resulted in preliminary rates that priced in all of the MMD yield decreases and 1 to 3 basis points of additional tightening based on initial investor interest and real-time activity in the secondary markets.

Due to a strong marketing effort and bifurcated premium couponing strategy to cater to various investors, the transaction received more than $1.7 billion of orders, 82% of which were placed by Siebert Brandford Shank. This over-subscription allowed further decreases in yields. 73 investors participated in the transaction.