Siebert Cisneros Shank sold the Ravenswood City School District’s transaction, as senior manager on December 4, 2018; this was SCS’s fourth consecutive senior managed transaction for the District and the first senior managed transaction for the District’s Election of 2018 General Obligation bond authorization.
Proceeds from the Series 2018 Bonds will be used to fund specific school facility construction, repair, and improvement projects. The Series 2018 Bonds are the first series issued under the voter approved 2018 authorization on June 5, 2018 in an aggregate principal amount not to exceed $70,000,000.
SCS worked with the District, District’s Bond Counsel, Orrick Herrington & Sutcliffe L.L.P., and its Municipal Advisor, Eastshore Consulting LLC, to structure the new money financing.
The District’s tax base in well diversified and growth in the assessed value of taxable property in the District is projected to remain robust. The Bonds are secured by ad valorem property taxes.
SCS worked alongside the District and Eastshore Consulting to evaluate multiple amortization scenarios, and settled on a 25-year amortization structure.
SCS stress tested various structures to ensure that sharp declines in AV would still allow the District ample property tax revenue coverage over debt service. We maximized available property tax revenues in the first two years of the structure. In subsequent years, we proportionally spread par to create capacity for debt service from additional Election of 2018 bond issuances.
Leading up to pricing, municipal and US treasury bonds strongly moved to lower yields. Continued equity volatility, a more dovish Federal Reserve, US-China trade tensions, and Brexit developments were the primary reasons for the volatility. The week also marked the largest in muni volume for December with over $8 billion in negotiated volume.
During preliminary pricing, SCS was able to maintain spreads ranging from -10 basis points in 2019 to 27 basis points through 2043. During repricing, spreads to MMD for the Series 2018 Bonds bumped by 6 bps in the 2031-2043 maturity, ranging from 14 to 21 basis points. Overall, the District’s bonds were well received by investors, resulting in the Series 2018 Bonds being priced at a All-in TIC of 4.16% and an average life of 15.8 years.
As a result of SCS’s strong pre-marketing effort and aggressive pricing strategy, the bonds were over 2.9x oversubscribed.