Columbus City SD
Various Purpose Refunding, Series 2014A &
School Facilities Construction Refunding Series 2014B
Siebert Brandford Shank served as senior manager to the Columbus City School District for this refunding transaction which priced in November 2014. The Series 2014A tax-exempt bonds were issued to advance refund certain maturities of the District’s outstanding Series 2007, 2008, 2009-A and 2009-B Bonds. The Series 2014B taxable bonds were issued to advance refund certain maturities of the District’s outstanding Series 2006 Bonds.
The refunding candidates were highly sensitive to market rates. Additionally, the structure of the bonds was very complex with many moving parts due to a state law requiring that for each series of bonds being refunded, the par amount of the refunding bonds could not exceed the par amount of the refunded bonds. This necessitated structuring both series with enough premium bonds to comply with this requirement, and then successfully marketing premium taxable bonds, which are very rare in the municipal market.
In the weeks prior to pricing, Siebert Brandford Shank provided the District with regular refunding updates and analyzed different refunding alternatives, including an escrow funded with SLGS versus Open Market Securities (“OMS”). Following our recommendation, the District elected to utilize an OMS escrow due to significant additional savings achieved when compared to a SLGS escrow.
The bonds were priced in an adverse market environment with a large new issue supply of $8.8 billion coming to market that week. Following difficulty placing the premium bonds with taxable buyers, the Series 2014B spreads were widened by 5 to 10 basis points for the taxable launch and ultimately received over $243.2 million of orders at the new levels.
Final pricing spreads were 1 to 5 bps through consensus spreads in years 2019 to 2024 and 7 to 9 basis points above consensus spreads in years 2025 to 2028—between the time consensus spreads were submitted on November 3rd and the end of pricing on November 6th, MMD had increased by between 1 and 9 bps in years 2019 through 2028.
Siebert Brandford Shank’s recommendation to utilize an OMS escrow proved to be very beneficial—the District saved approximately $782,000 compared to a refunding with a traditional SLGS escrow.
Despite pricing in a tough market, Siebert Brandford Shank was able to sell the Series 2014A Bonds at tighter spreads to MMD through 2024 compared to the syndicate’s consensus spreads. The transaction resulted in gross savings of $7,481,869, net present value savings of $6,292,087 (4.13% of refunded par) and an all-in TIC of 3.03%.