Dormitory Authority of the State of New York
State University of New York
Dormitory Facilities Revenue Bonds, Series 2015A
SBS serves DASNY as book-running senior manager for $268 million revenue bonds
In April 2015 Siebert Brandford Shank served as senior manager for DASNY SUNY’s second financing which was solely secured by the University’s Dormitory Facilities Revenue Program.
With the exception of the inaugural 2013 issue, all previous SUNY dormitory facilities issues are also backed by New York State appropriations. Similar to the work that our firm assisted with on the last SUNY issue, SBS assisted DASNY in all quantitative analyses, specifically tax and campus-by-campus refunding analyses for this current transaction. DASNY entered the market against a backdrop of heavy corporate issuance, rising municipal inventories, and increasing German bund yields. The confluence of all these factors along with disappointing U.S. GDP data caused significant volatility in the U.S. Treasury and municipal markets throughout the week that DASNY priced. On the day of retail pricing, given the unusual amount of volatility in the market and that afternoon’s FOMC announcement, our underwriting team held off on releasing retail pricing until mid-morning to allow additional time for more accurate market reads. At that juncture, SBS presented a retail scale that was 2-5 basis points cheaper than the initial scale, reflecting the 1-5 basis points worth of cuts that were being estimated at mid-morning and positive, initial investor feedback from key customers including: J.P. Morgan, Nuveen Asset Management, Columbia Management, Samson, Lord Abbett, Credit Suisse, Offit Bank, and GSAM Private Wealth. By day’s end, the team’s “wait-and-see” approach had paid off, with investors generating $131 million of retail orders despite the tumultuous market. On April 30th, the day of pricing, the market remained begrudgingly weak: the 5- and 10-year Treasuries were at 1.50% and 2.10%, respectively, prior to our morning call. As a point of comparison, a full day earlier, the 5- and 10-year Treasury rates were 1.42% and 2.02%, respectively. Given the strong retail order performance the prior day, SBS recommended maintaining the same spread levels throughout the curve (if not better) in years 2022 and out. However, contrary to recent market dynamics, as the frontend of the curve (years 2017-2021) saw low levels of investor interest, SBS recommended widening spreads by 2-5 basis points in that range to attract greater investor interest. Despite the further spread increases, the “early” maturities failed to draw significant levels of investor interest. As a result, SBS underwrote approximately $9.64 million of bonds in 2017 in order to maintain the integrity of the order book in the rest of the bond structure. The overwhelming majority of the $229 million of institutional priority orders were for the other bond maturities in the later part of the curve. Institutional investor accounts included: Credit Suisse, Mackay Shields, Tishman Speyer, Loomis Sayles, Conning, Lord Abbett, Eaton Vance, Chilton Financial, Alliance Bernstein, Standish Mellon, Nuveen, and RBC Portfolio.