On January 26, 2023, the City of St. Louis Missouri (the “City”) and St. Louis Lambert International Airport (the “Airport”) sold its $64.935 million Airport Revenue Bonds, comprising of $60.080 million of Airport Revenue Bonds, Series 2023A (Non-AMT) and $4.855 million of Airport Revenue Bonds, Series 2023B (AMT) (the “Bonds”) with Loop Capital Markets serving as Book Running Senior Manager. The Bonds are rated A2 (Stable) and A (Stable) by Moody’s and Fitch, respectively recognizing the enplanement recovery and route expansion at the Airport.
Bond proceeds will be used to (i) finance the costs of the construction and improvement of the Airport, (ii) fund the purchase of a debt service reserve surety for the Bonds, and (iii) pay costs of issuance for the Bonds. The Firm assisted the City and Airport in creating the rating agency and investor presentations. The transaction was well received with almost all 33 investors having viewed the POS and investor presentation during the pre-marketing process. Additionally, the City and Airport answered questions received from investors during the pre-marketing process. The Firm provided the City, Airport and Financial Advisors read sheets with investor feedback throughout the pre-marketing period.
The City and Airport received strong interest with over $136 million of priority orders or 2.1x overall subscription. Investors primarily consisted of Bond Funds and SMAs. Due to strong investor interest, spread to MMD was reduced between 2 and 4 basis points, at spots along the yield curve, between pre-pricing and final pricing. The Bonds had an All-In TIC of 4.14%.
On January 19, 2023, New Jersey Economic Development Authority (“NJEDA”) sold its $160 million State Lease Revenue Bonds (Offshore Wind Port Project), 2023 Series A (Federally Taxable) (Green Bonds – Climate Bond Certified) (the “Bonds”) for which Loop Capital Markets served as Bookrunning Senior Manager. The Bonds are issued under the state appropriation credit for the State of New Jersey and represent the NJEDA’s inaugural issuance for the New Jersey Wind Port Project (“NJWP Project”), the first purpose-built offshore wind port in the U.S. Bond proceeds will finance a portion of the preconstruction and construction costs for Phase 1 and Phase 2 of the NJWP Project. The bonds received the highest Green Bond designation by the Climate Bond Initiative with a Second Party Opinion provided by Kestrel and the bonds are also the first Climate Bond under the Marine Renewable Energy Sector Criteria in the U.S.
The Bonds are rated Baa1 and BBB+ by Moody’s and S&P, respectively, with positive outlooks. Loop’s banking team assisted the NJEDA in creating a thorough investor presentation to explain the two phases of development of the NJWP Project, the Green Bond and Climate Bond designation, the lease/lease-back structure of the Bonds between the State and the NJEDA, and the fundamental economic strength of the State. The transaction was well received with significant investor interest as illustrated with over 65 unique investor views of the POS and investor presentation and Loop coordinated four 1 x 1 investor calls and handled multiple investor queries. Overall, the bonds had strong subscription levels. Loop tightened the credit spreads by up to 20 bps from IOIs to Guidance and by an additional 5 bps at the Launch/final pricing.
On December 6, 2022, Loop Capital Markets served as Senior Manager for the State of Ohio’s (the “State”) $377 million General Obligation Bonds, Series 2022 consisting of $176.790 million New Money Bonds (Infrastructure program) and $200.335 million Refunding Bonds (Infrastructure, Conservation, and Common Schools programs). The Bonds were rated Aa1 (Positive) / AA+ (Stable) / AAA (Stable) by Moody’s, S&P, and Fitch, respectively.
This transaction was the State’s inaugural G.O. bond issuance since receiving a positive outlook by Moody’s and a “AAA” rating from Fitch – the State’s first AAA G.O. bond rating since 1978. Proceeds of the bonds were used to (i) fund $200 million in new money capital projects for the Infrastructure program, which funds local government road and water and sewer projects, and (ii) current refund $216.48 million of outstanding G.O. bonds for PV debt service savings totaling $17.182 million, or 7.93% of bonds refunded. The State capitalized on the strong momentum of the municipal market and decided to accelerate the pricing by one day.
Loop’s banking team assisted the State with a comprehensive and targeted credit rating strategy, which focused on the State’s strengths (i.e., improving demographics and financials vs. select AAA-rated states). Prior to pricing, Loop developed a list of target investors (top holders of the State’s bonds and top G.O. holders of select highly rated states that are not the top holders of Ohio’s bonds). Throughout the pre-marketing process, the Firm provided the State and its municipal advisor with investor feedback, including investors expected to place orders and any rationale from non-participating accounts.
Constructive feedback from investors throughout pre-marketing led to 54 unique institutional accounts placing orders during the order period, 19 of which were new investors for the State’s G.O. credit. The Firm generated $1.9 billion in priority orders, or 5.0x oversubscription. After repricing, the transaction finished with $1.6 billion priority orders, or 4.4x oversubscribed.
On November 16, 2022, Loop Capital Markets served as Bookrunning Senior Manager on Ohio Water Development Authority’s ( “OWDA”) $150 million Drinking Water Assistance Fund (“DWAF”) Revenue Bonds, Series 2022A (Sustainability Bonds) (the “Bonds”). The Bonds are rated Aaa (Stable) by Moody’s and AAA (Stable) by S&P. The Bonds were classified as Sustainability Bonds with a Second Party Opinion from Kestrel Verifiers. Proceeds from the transaction will fund lending to local government agencies in Ohio for water and sewer projects.
Loop Capital Markets assisted OWDA in creating a comprehensive electronic investor roadshow for the transaction. 17 investors viewed the roadshow between the release of the preliminary official statement and pricing. The Firm’s banking team compiled an investor analysis that helped identify underrepresented investors by cross referencing with holders of certain categories. Throughout the pre-marketing process, the Firm provided OWDA with investor feedback, including investors expected to place orders and the rationale from non-participating accounts.
Strong market dynamics including strong investor reads from pre-marketing, pricing was accelerated by one day. 47 institutional accounts participated in the transaction with $1.4 billion in priority orders resulting in 11.6x oversubscription. The Firm generated $355 million of orders in aggregate from nine ESG bond funds. Given the robust results of the order period, the Firm was able to tighten spreads by up to 25 bps between pre-marketing levels and final pricing. Of the accounts that remained following adjustments, 29 investors were new to the DWAF credit and 13 investors were new to OWDA. Due to strong demand, the transaction was upsized by $25 million.
On November 15, 2022, the New York City Municipal Water Finance Authority (“NYW”) priced $750 million of Second Resolution Revenue Bonds, Fiscal 2023 Series AA, Subseries AA-1, AA-2 and AA-3 (the “Bonds”). The Bonds were rated Aa1/AA+/AA+ by Moody’s, S&P and Fitch, respectively. Bond proceeds were used to fund capital improvements, refund certain outstanding bonds and pay costs of issuance. Loop Capital assisted NYW in developing a comprehensive internet roadshow, primarily aimed at addressing the credit highlights and legal protections inherent in the structure, and the financial strength of NYW. The roadshow was viewed by 58 research analysts and investors.
The transaction was the largest negotiated transaction of the week. The Bonds priced during volatile market conditions with the Fed having raised the Fed Funds rate 375 bps in 2022. However, lower-than-expected October Consumer Price Index inflation rate on November 10 spurred a rally in the fixed income market with the ten-year Treasury and MMD decreasing by 28 bps and 12 bps, respectively. This improvement in the market increased the savings enough so the refunding component which was originally “out of the money” now met NYW’s refunding threshold. The benign Producer Price Index release on the morning of the retail order period reinforced the favorable market tone. As a result, Loop and NYW decided to accelerate the Institutional Pricing after only half day of retail order period. Ultimately, orders were placed by 85 unique accounts. The retail order period generated $445.6 million in orders, followed by an institutional order period that generated $3.3 billion in orders, resulting in at 4.6x oversubscription. Despite market volatility, NYW achieved superior pricing results. Due to strong subscription levels, the Firm was able to lower yields by 5 to 8 bps from the retail order period, and lower up to an additional 10 bps depending on the maturity in the final pricing.
The refunding of the Series 2013BB 5% coupon bonds generated $16.3 million PV savings, or 5.67%, and $32.0 million of cashflow savings for a TIC of 4.63%. Because of the overall subscription and the need for additional new money proceeds, the par amount was increased from approximately $682 million to $750 million.
On June 28, Loop Capital Markets (“Firm”) served as Senior Manager for a combined $280,845,000 offering of tax-exempt General Obligation Bonds issued by Sacramento City Unified School District (“District”), comprised of $225,000,000 Election of 2020 (Measure H), 2022 Series A Bonds (New Money) and $55,845,000 Refunding Bonds, (collectively, “the Bonds”) rated A3 (negative) by Moody’s, AA by S&P (based on BAM insurance), and AA (stable) by Kroll, respectively.
The Refunding Bonds current refunded the District’s 2012 GO Refunding Bonds, and the Series A Bonds were the first drawdown of the District’s $750 million Measure H authorization.
The Firm worked closely with the District’s Municipal Advisor to tailor the amortization of the Series A Bonds to give the District maximum flexibility for subsequent drawdowns of Measure H, keeping a keen eye on the $60 tax rate indicated to voters under Measure H. Both Loop and the District’s Municipal Advisor recommended applying for a Kroll rating due to our agreement with Kroll’s rating methodology for California K-12 GO Bonds, which focuses on an issuer’s underlying tax base ($40 billion AV in the case of the District), the statutory framework supporting the imposition, collection, and administration of voter-approved unlimited ad valorem tax levies, as well as the statutory lien and oversight mechanisms provided by State law. Our banking team recommended using an 8-year call for the Series A New Money Bonds to sync up with the District’s 2021 Bonds, setting up a potential future “consolidated current refunding.”
Following the posting of the POS, our bankers held a “teach in” call with our sales force to explain the ratings differential and to emphasize the very strong underlying security. To focus our premarketing efforts, we mapped out the top holders of the District’s 2012 GO Refunding Bonds (who will be refunded out), as well as the top holders of the District’s outstanding GO Bonds. Our underwriting desk added a discount 4% coupon and two 5.50% coupon Terms in response to reverse inquiry from an “anchor” order. Our sales force generated over $1 billion in orders from 38 unique accounts, including 12 previous investors and 26 new accounts compared to the District’s June 2021 sale. At the final pricing, the Refunding Bonds generated $4.7 million of gross taxpayer savings, or $3.8 million present value (6.38%). In support of our price views, the syndicate underwrote $21.2 million bonds (approximately 8% of the loan).
On June 8, 2022, Loop Capital Markets (the “Firm”) served as the joint bookrunner for the city of Atlanta, Georgia’s (the “City”) $382.370 million Airport General Revenue Bonds, Series 2022AB (“Series 2022AB GARBs”) and the City’s $164.050 million Airport Passenger Facility Charge and Subordinate Lien General Revenue Bonds, Series 2022CD (“Series 2022CD PFC Bonds” and together with the Series 2022AB GARBs, the “Bonds”). All of the Bonds were rated Aa3 (Stable) / AA- (Stable) by Moody’s and Fitch, respectively.
The Bonds were issued to finance portions of the 2022 Project, which is comprised of new money projects related to the City of Atlanta’s 2026 Capital Plan (including renovations to runways, terminal, parking facilities and supporting infrastructure). The Series 2022AB GARBs had maturities from 2023 through 2052 while the Series 2022CD PFC Bonds had maturities from 2026-2042.
The Firm provided both superior banking coverage in anticipation of the financing (mandated for senior positions on consecutive GARB financings) and exceptional sales efforts during pre-marketing and marketing during a volatile pricing period. Benchmark tax-exempt and taxable rates rose considerably during the days leading up to pricing in anticipation of May’s CPI release on Friday, June 10. In total, the issue was 2.1x oversubscribed with heavy demand flow in the front end. MMD rose 10 bps, but despite the volatility, the Firm and the other senior manager were able to underwrite at or near pre-pricing levels for the AMT bonds and for some maturities of the Non-AMT bonds.
Across all series, over $44 million of priority orders were generated by the Firm. Serving as joint bookrunner, the Firm was allotted $11.4 million bonds across the 4 series. At the verbal award, the senior managers agreed to underwrite the offering with approximately $180 million in unsold balances. By end of day, the underwriting syndicate committed capital to inventory $39 million of bonds in certain maturities from 2028 to 2047. Undeterred by the daunting and volatile market, the Firm was willing to contribute a significant amount of capital on behalf of the issuer. Despite extremely difficult and volatile markets that saw interest rates increase by more than 60 bp on certain maturities, as 40 year inflation highs and a 75 bp increase by the Federal Reserve negatively impacted the market as well.
On May 17, 2022, Loop Capital Markets (“Loop” or the “Firm”) served as Senior Manager on Princeton University’s (the “University”) $300 million Taxable Bonds, Series 2022 (Corporate CUSIP). The Bonds were rated Aaa/AAA by Moody’s and S&P. The Firm also served as Co-Senior Manager on the University’s tax-exempt issuance through the New Jersey Educational Facilities Authority (totaling $300MM), which priced the same day.
The University elected to issue the taxable bonds in a long-dated maturity and issue the tax-exempt bonds in 5-year and 10-year maturities, and Loop assisted the University and its Financial Advisor to develop a Plan of Finance that best captured current market dynamics (e.g., tax-exempt-to-taxable ratios), debt management objectives, and Index Eligibility benefit. Broader Fixed Income Markets had a softer tone leading up to pricing due to concerns around inflation, slowing growth, and an increasingly hawkish FOMC, leading to investors increasingly focusing on credit quality, with greater appetite for high-grade names such as the University. Ultimately, Loop and the syndicate generated over $1 billion in orders and was able to successfully execute a transaction that resulted in a yield of 4.201% to the University.
Immediately following the release of the Preliminary Offering Memorandum, our salesforce and the syndicate actively began the pre-marketing process and contacted a broad range of prospective investors. Loop’s team compiled an investor analysis identifying the University’s top corporate buyers and targeting the top national higher education taxable bond holders. The Firm also facilitated a one-on-one call with an existing investor and the University that led to a large order which helped drive leverage in the order book.
A total of 57 accounts participated in the transaction, resulting in over $1 billion of orders, or 3.5x oversubscription. Participating accounts included a variety of investor types, including Insurance Companies, Bond Funds, Prop/Trading Accounts, Money Managers, Investment Advisors, ETFs and Banks. The transaction also had a strong reception from International Investors. The Firm targeted Insurance Companies during pre-marketing as likely to participate strongly in the transaction and these investors ultimately composed 43% of the initial order book. Due to strong subscription levels, the Firm was able to tighten spreads by 10 basis points to achieve a final spread of +100 bps.
Loop Capital Markets served as joint bookrunner for a $500 million taxable financing for Harvard University on April 11th. The financing was a direct issuance of Harvard using a corporate CUSIP. The bonds were structured as a 30 year bullet, rated Aaa/AAA by Moody’s and S&P, respectively, and were priced at a spread to the 30 year Treasury plus 90 bps for a yield of 3.745%. The offering was completed in a day starting with an Indications of Interest (IOI) period in the morning with a spread of plus 105 and going directly to a launch with a spread tightening of 15 basis points to plus 90 bypassing the typical price guidance phase.
The transaction received strong subscription levels with three orders generated by Loop Capital which were from one of the largest global asset managers, an insurance company, and a hedge fund. This financing was the first component of a two-part financing from Harvard including a 10-year tax-exempt Green Bond to be issued by the University through the Massachusetts Development Finance Agency which is expected to price in early May 2022.
On March 30, 2022, Loop Capital Markets served as the Book Running Senior Manager for the NYC Transitional Finance Authority’s $950 million Future Tax Secured Subordinated Bonds, Fiscal 2022 Series F, Subseries F-1. The Bonds were rated Aa1 (Stable) by Moody’s, AAA (Stable) by S&P and AAA (Stable) by Fitch. Bond proceeds will be used to finance general City capital expenditures. Additionally, $300 million of Fiscal 2022 Subseries F-2 and F-3 (Taxable) were sold competitively on the same day.
In preparation for pricing, a roadshow was created, which was viewed by 52 investors. The Firm conducted a two-day Retail Order Period (ROP) with $706 million offered on Day 1 and $750.66 million on Day 2. $212.93 million in orders were received on Day 1 and $320.30 million by the end of Day 2. After the ROP, TFA entered the market with $747.28 million of bonds offered for the Institutional Order Period (IOP). The bond market experienced a high level of volatility due to potential increase in Fed Funds Rate, ongoing geopolitical tension between Russia and Ukraine, Fed speakers’ comments, and major economic announcements. Given the overall significant New York supply over the last month, Loop Capital’s salesforce worked diligently to produce superior results and generated total institutional orders of $5.86 billion from 121 accounts. Total orders during the ROP and IOP were $6.13 billion, and the transaction was oversubscribed by 6.5x. The transaction was the third largest negotiated tax-exempt transaction of the week, with a total volume of almost $9.6 billion ($7.32 billion negotiated and $2.23 billion competitive). Due to strong subscription levels, the Firm was able to lower yields by up to 8 bps depending on the maturity.
