San Diego USD 2016GO, Series I

San Diego Unified School District
$99,999,240
2016 General Obligation Bonds

The firm’s 2nd senior-managed transaction for the District in the 2015

Siebert Cisneros Shank served as senior manager on the San Diego Unified School District’s 2016 GO Bonds, Series I which priced in December 2015—the firm’s second senior-managed transaction for the District in the 2015. The success of the first transaction was a determining factor in the District rewarding SCS with this transaction that included the big task of bringing callable capital appreciation bonds (“CABs”) to market. Due to the constraints of the ad valorem tax rate model for the combined Proposition MM and Proposition S, the District needed to issue CABs as interest payments from current interest bonds which could not be sustained without increasing the tax rate. The State of California’s Assembly Bill 182 requires CABs maturing after 10 years to be subject to optional redemption. Since CABs were needed, the overall structure also required premium CABs to generate proceeds to cover cost of issuance and underwriter’s discount. At the end of the order period, there were $745 million in total orders (based on the maturity value of the CABs) from 46 different investors. Due to the strong demand for the transaction, pricing spreads for the transaction were decreased by 4 to 7 basis points throughout the maturity structure. The re-pricing generated an all-in true interest cost of 4.092% and an aggregate debt service of $208.95 million, well below AB 182’s limit.