Siebert Cisneros Shank served as book-running sole manager for the City’s Energy Savings Obligation Refunding transaction which priced on April 10, 2019, and received an underlying rating of A+ by S&P.
Bond proceeds will be used to implement an energy savings plan through an energy savings improvement program for the East Orange Board of Education (the “Board”) and fund capitalized interest on the bonds through October 1, 2020.
The Board operates as a Type I school district; therefore, it is required to finance the issuance of the bonds through the City, as it does not have the statutory power to issue its own bonds. The bonds are general obligations of the City and are secured by the School Bond Reserve for the Support of Free Public Schools of New Jersey.
SCS and the City’s financial advisor determined that it would be cost-effective to utilize bond insurance in all maturities to lower all-in cost and to satisfy select investor demand. Additionally, Open Market Securities were bid out and purchased for the construction fund to get additional debt service coverage in each year based on revenue constraints.
On Wednesday morning (4/10), SCS released a pre-pricing wire with 5%, 4%, and 3% coupons to attract multiple investor types, especially prop/trading, SMA, and bond fund investors. The 2021 to 2040 maturities were oversubscribed by 1.2x to 8.7x following the order period. Overall, the transaction generated $75.2 million of priority orders and was 4.5x oversubscribed.
The transaction received strong interest, including orders from 24 different investors. Given the strong book of orders, SCS tightened spreads by 2 bps in the 2022 – 2023 maturities, 1 – 4 bps in the 2027 – 2034 maturities, and 4 – 6 bps in the 2035 – 2040 maturities.
Due to SCS’ strong marketing and pricing results as well as the backstop of bond insurance, the City achieved an all-in TIC of 3.202% and generated energy savings of $3.4 million to the Board over the financing period.