Los Angeles MTA, Refunding Series 2015

Los Angeles County Metropolitan Transportation Authority

General Revenue Refunding Bonds (Union Station Gateway Project), Series 2015 (Nov)

Siebert Cisneros Shank served as book-running senior manager for the Los Angeles County Metropolitan Transportation Authority’s Series 2015 Bonds on Tuesday, November 10, 2015. This transaction was LACMTA’s first negotiated transaction since 2012. As the senior manager, our firm was intimately involved throughout the entire financing process from providing input into an associated forward delivery agreement to leading the production of the rating agency and investor presentations. The bonds were issued to refund the series 2004 A, B, C, D outstanding auction rate securities to fixed rate debt. Prior to this financing, the GRBs were rated A1/A+/NR. As a fiscally conservative agency, the LACMTA had no future bond issuance plans under its GRB credit and decided to close the lien for any additional new money GRBs. The LACMTA also revised its debt service reserve fund requirement from basing it on an issue-by-issue basis to a common DSRF. The closing of the lien and the revised DSRF requirement had a major positive impact in the view of the rating agencies and along with its naturally strong credit features, resulted in both Moody’s and S&P raising the GRB ratings two notches to Aa2/AA/NR.

There were $211 million in total orders including $1.1 million in true mom and pop retail orders. These orders were submitted by 32 total investors, 28 of which didn’t currently own the GRB credit. Our firm submitted 74% of the total orders. With 2.4x oversubscription on a priority basis, we decreased interest rates by two to five basis points from the initial order period. More importantly, we were able to sell sub 5% coupon bonds in the 2022 through 2025 maturities for the benefit of LAMTA without incurring a pricing penalty. The final All-In TIC of the transaction was 2.351%. Due to the overwhelming investor interest, lowering of interest rates, and the introduction of new investors, the LACMTA was very pleased with the efforts of SCS and the underwriting team.