On February 25, 2019, SCS served as the senior managing underwriter for the San Benito CISD’s Series 2019 Bonds. Stemming from a November 2018 ballot initiative authorizing $40 million, the transaction was SCS’ first underwriting engagement for the District, which is located in the Rio Grande Valley of Texas.
The bonds were structured with 5% coupon serial maturities in 2020 through 2044 and a 4% term bond maturing in 2049. The amortization had characteristics of a deferred debt service structure, with reduced principal payments through 2025.
Citing stable operations, maintenance of very strong reserves, and access to the broad and diverse Brownsville–Harlingen, TX MSA, S&P assigned underlying ratings of ‘A’ to the District. The bonds were guaranteed by the Permanent School Fund.
The week prior to pricing was characterized by muted movement overall, with progress on international trade (U.S. / China) tempered by lackluster economic releases domestically. With a Monday pricing date, the order period began at 10:45am EST and was set for an hour and a half, slightly later and longer than order periods of similarly sized issues. The tone was set early with an $11 million order from an SMA account looking to secure all bonds maturing in 2027 – 2039.
The Firm’s sales desk submitted nearly $40 million in priority orders, representing 82% of all priority orders, allowing for the Desk to recommend tightening spreads in 6 maturities.
Securing bids for odd-lot maturities of less than $100,000 in years 2021 – 2025 (see structure above) proved to be a challenge. In order to ensure the best result for the District, SCS stepped up to underwrite all unsold bonds, totaling $280,000 maturing in 2021- 2024, absent any changes to the preliminary pricing yields.