Deals 03/14/2022

Loop Capital Markets Serves as Bookrunning Senior Manager on the City of Pittsburgh’s $51.1 million General Obligation Bonds, Series of 2022

Earlier this month, Loop Capital Markets served as the Senior Manager on the City of Pittsburgh’s (the “City”) $51.1 million General Obligation Bonds, Series of 2022 (the “Bonds”). The Bonds were rated AA- (Stable) / AA- (Stable) by S&P and Fitch, respectively.

Bond proceeds were used to finance new money capital needs of the City. The Bonds had a maturity structure, comprised of serial maturities from 2023-2042 and generated an All-In TIC of 3.24%. The Bonds were structured with an 8-year par call and 5.00% coupons. As part of the financing, Fitch upgraded the City’s Bonds rating outlook from negative to stable based on the City’s stable financial performance and gradually rebuilding reserves. The strength of the City’s General Obligation credit also reflected very strong operating performance evidenced by a high reserve cushion and its significant independent legal ability to increase revenues.

The Firm entered the order period after the release of February’s CPI data, which came in line with the expectation of 7.9% YoY increase and as inflationary concerns in the U.S. reached a new 40-year high. The Bonds were structured to achieve increasing stated yield and yield-to-maturity for each maturity in compliance with the Pennsylvania DCED Local Government Unit Debt Act. The Firm’s robust marketing efforts resulted in over 64% of the bonds (or $32.8 million) being sold to professional retail investors.

A total of 29 investors participated in the transaction, including separately managed accounts, bond funds, money managers, insurance companies, broker-dealers, and arbitrage accounts. The Firm generated nearly $170 million in total orders and achieved oversubscription levels of 3.3x. Due to strong subscription levels, the Firm was able to lower yields by up to 4 basis points depending on maturity, despite benchmark MMD rates on the day being higher by 5 to 7 bps throughout the curve. Despite challenging market conditions amid a rising interest rate environment and ahead of the FOMC meeting on March 15 and 16 (in which the Fed will begin a series of rate increases this year), the City achieved the best pricing results for its Bonds.