City of Shreveport
Water and Sewer Revenue Bonds, Series 2016B & C
Careful timing in volatile market leads to successful sale for City of Shreveport
This transaction was Siebert Cisneros Shank‘s third senior-managed transaction for the City of Shreveport. The Series 2016B tax-exempt bonds were issued to provide new money proceeds for the City’s water and sewer system and the Series 2016C taxable bonds were issued to pay termination costs associated with an outstanding interest rate swap. By terminating the interest rate swap, the City addressed one of its credit weaknesses. Along with improved fiscal health, the City was able to obtain a rating upgrade (from BBB+ to A) from Standard and Poor’s for its senior lien bonds.
As a senior manager, SCS also provided various structuring analyses for the City. The higher-cost taxable Series C Bonds were sized to achieve a level debt service profile with a final maturity in 2023 and the tax-exempt Series B Bonds were structured with a 25-year final maturity; the debt service of the new money issue wrapped around existing debt service of all outstanding debt, creating a more overall level debt service profile.
Every maturity of the transaction except for the Series 2016B’s 2041 Term Bond was offered with Build America Mutual bond insurance. Considering uncertainty and volatility in the market after the presidential election, SCS had originally recommended that the pricing be postponed and monitored on a day-by-day basis. However, the City was constrained with a closing date on December 1st as the process of terminating the interest swap was in full motion. Despite an uncertain market environment, every maturity of the transaction was fully subscribed for except two maturities, the Series 2016B bonds maturing in 2024 and 2025. As a result of the strong order book, SCS reduced yields by 5 bps to 6 bps for 2020, 2023 and 2037 term maturities. In order to maintain pricing levels, we also stepped up to underwrite all of the remaining unsold balance in the 2024 and 2025 maturities, totaling $2.18 million. This transaction attracted 68 different investors who submitted a total of $416 million in total orders. Our sales desk generated 84% of those orders.