HomeMy WebLinkAbout2020-099 Series 2020A General Obligation Refunding BondsDate: December 4, 2020 No. 2020-099
INFORMAL STAFF REPORT
TO MAYOR AND CITY COUNCIL
SUBJECT:
City’s most recent competitive bond sale for the Series 2020A General Obligation Refunding Bonds.
BACKGROUND: The purpose of this report is to provide the City Council with details regarding the sale of Series 2020A General Obligation Refunding Bonds authorized on October 27, 2020.
During the August 6, 2020 Council meeting staff was asked to review additional refunding opportunities due to favorable market conditions obtained in the prior bond sale. In response to Council’s request, Informal Staff Report (ISR) No. 2020-81 outlined tax-exempt refunding opportunities for the City’s Certificates of Obligation, Series 2011 and General Obligation
Refunding and Improvement Bonds, Series 2011. The principal amount of these outstanding
obligations to be refunded by the Series 2020A Refunding Bonds was $15,185,000 for the Certificates of Obligations and $1,355,000 for the General Obligation Refunding and Improvement Bonds, for a total of $16,540,000.
DISCUSSION:
On November 17, 2020, the City along with its financial advisor, Hilltop Securities, conducted a competitive sale for the General Obligation Refunding Bonds, Series 2020A. The City expects to close on the Series 2020A Bonds on December 17, 2020.
The preliminary numbers presented to Council on October 27, 2020 estimated the net present value savings of the refunding to be about $2,873,861. Based on the winning bid from Raymond James & Associates, Inc., the final net present value savings achieved was $3,444,385. The increased savings is due to improvement in the market as well some conservatism in the
assumptions used within the preliminary numbers.
Series 2020A Prior Debt Service Refunding Debt Service Debt Service Savings Net PV Savings
General Fund $ 2,129,703.20 $ 1,779,134.73 $ 350,568.47 $ 332,599.34
Electric $ 16,437,584.47 $ 13,643,262.23 $ 2,794,322.24 $ 2,656,292.05
Solid Waste $ 2,828,675.02 $ 2,349,233.06 $ 479,441.96 $ 455,493.87
Total $ 21,395,962.69 $ 17,771,630.02 $ 3,624,332.67 $ 3,444,385.26
The Series 2020A Refunding Bonds were awarded to Raymond James & Associates, Inc. Below is a list of all participating underwriting firms that submitted a bid.
Date: December 4, 2020 No. 2020-099
Participating Firms
Raymond James & Associates, Inc.* The Baker Group Janney Montgomery Scott LLC KeyBanc Capital Markets Citigroup Global Markets Inc. BNY Mellon Capital Markets Piper Sandler & Co. FHN Financial Capital Markets
J.P. Morgan Securities LLC Robert W. Baird & Co., Inc.
Huntington Securities, Inc. ______________________________________________________________________________
* Winning Bid As approved by the City Council on October 27, 2020, the bond sale met all the following required parameters listed below:
1) The maximum principal amount of bonds shall not exceed $16,540,000; 2) Final stated maturity of February 15, 2031; 3) Refunding must produce savings of at least 2.75%; 4) Delegation authority ends April 27, 2021;
5) Minimum net present value savings of 8.50%.
The final net present value savings for the Series 2020A Refunding Bonds was $3,444,385 or 20.82% of the refunded bond amount, well in excess of the established criteria. The all-in true interest cost for the Series 2020A Refunding Bonds, which includes the cost of issuance, is
0.89%, below our estimate of 1.43%.
Please do not hesitate to contact me if you have any further questions on the results of the City’s most recent debt issuance.
STAFF CONTACT: Randee Klingele, Treasury Manager 940-349-8206
randee.klingele@cityofdenton.com