2014 bond preview and market conditions
TRANSCRIPT
Contacts
July 24, 2014 City of College Station, Texas
Drew Masterson
Managing Director
700 Milam Street, Suite 500
Houston, Texas 77002
713.654.8654
2014 Bond Preview and Market Conditions
Kristin Garcia Blomquist
Associate
700 Milam Street, Suite 500
Houston, Texas 77002
713.654.8675
Christine Crotwell
Assistant Vice President
700 Milam Street, Suite 500
Houston, Texas 77002
713.654.8636
Member FINRA & SIPC © 2013
First Southwest Company
CI
TY
O
F
CO
LL
EG
E
ST
AT
IO
N
Summary of Preliminary Numbers
3
Over the past month, the municipal has been volatile but has ultimately moved in our favor. Rates decreased roughly 12 basis points since our last set of preliminary numbers.
Par Amount All-in TIC
Average Debt Service
GO New Money………………………………………………………12,025,000$ 3.467% 947,635$ GO Refunding………………………………………………………23,025,000 2.500% 2,491,540 Total GO and Refunding Bonds……………………………..35,050,000$ 3.000% 3,439,175$
Total Certificates………………………………………………………34,015,000$ 3.341% 2,580,765$
Par Amount All-in TIC
Average Debt Service
GO New Money………………………………………………………12,190,000$ 3.602% 958,699$ GO Refunding………………………………………………………20,435,000 2.677% 2,257,209 Total GO and Refunding Bonds……………………………..32,625,000$ 3.127% 3,215,908$
Total Certificates………………………………………………………34,485,000$ 3.479% 2,609,652$
Preliminary Statistics - Rates as of June 12, 2014
Preliminary Statistics - Rates as of July 22, 2014
Member FINRA & SIPC © 2013
First Southwest Company
CI
TY
O
F
CO
LL
EG
E
ST
AT
IO
N
Summary of Refunding Statistics
4
6/12/2014 7/22/2014
Refunding Par Amount…………………………………………………………………..20,435,000$ 23,055,000$
Gross Savings (2015-2026)…………………………………………………………………..2,591,859$ 2,857,505$ Net Present Value (NPV) Savings…………………………………………………………………..2,158,950$ 2,437,431$ Average Annual Savings (2015-2026)…………………………………………………………………..129,593$ 142,875$ Net PV Savings as a % of Refunded Bonds…………………………………………………………………..9.52% 9.51%
All-in True Interest Cost…………………………………………………………………..2.677% 2.500%Average Coupon of Refunded Bonds………………………… 4.927% 4.622%Negative Arbitrage…………………………………………………………………..218,428$ 221,339$ Negative Arbitrage as % of NPV Savings………………………..10.117% 9.081%
GO Refunding Statistics
Member FINRA & SIPC © 2013
First Southwest Company
CI
TY
O
F
CO
LL
EG
E
ST
AT
IO
N
Summary of Proposed Refunded Bonds
5
Principal Amount Maturities InterestSeries to be Refunded* Refunded Call Date Rates
Certificates of Obligation, Series 2006 4,660,000$ 2016-2026 2/15/2015 4.375%-4.750%General Obligation Improvement Bonds, Series 2006 4,600,000 2016-2026 2/15/2015 4.375%-4.750%
Total General Obligation Debt to be Refunded 9,260,000$
Principal Amount Maturities InterestSeries to be Refunded* Refunded Call Date Rates
Utility System Revenue Refunding Bonds, Series 2005A 4,830,000$ 2015-2018 9/11/2014 4.000%-5.250%Utility System Revenue Bonds, Series 2006 11,535,000 2016-2026 2/1/2015 4.375%-4.750%
Total Utility System Revenue Debt to be Refunded 16,365,000$
Total Outstanding Debt to be Refunded 25,625,000$ Average Rate: 4.622%
General Obligation Refunding Candidates
Utility System Refunding Candidates
Member FINRA & SIPC © 2013
First Southwest Company
CI
TY
O
F
CO
LL
EG
E
ST
AT
IO
N
Timeline
6
Completion Date Event Responsibility
Thu - Jun 12 City Council Meeting: Authorize Publication of Notice of Intent for Certificates
FWG
Thu - Jun 19 Publish First Notice of Intent for Certificates BC
Thu - Jun 26 Publish Second Notice of Intent for Certificates BC
Thu - Jul 3 Distribute Underwriter RFP FA
Week of July 14 Rating Calls FWG
Thu - Jul 17 Underwriter RFP Responses Due UW
Thu - Jul 24 City Council Meeting: Approve sale parameters, appoint Paying Agent/Registrar and appoint Underwriters, adopt Ordinances and authorize preparation of Official Statement.
City
Fri - Aug 1 Receive Ratings FWG
Tue - Aug 5 Due Diligence Call with UW Counsel FWG
Thu - Aug 7 Post electronic POS FA
Thu - Aug 14 ***Potential Pricing Date*** Pricing Officer Awards Bonds and Certificates to Underwriters
City
Fri - Aug 22 Print and mail OS FA
Thu - Sep 11 Closing FWG, UW
S M T W T F S S M T W T F S S M T W T F S S M T W T F S1 2 3 1 2 3 4 5 6 7 1 2 3 4 5 1 2
4 5 6 7 8 9 10 8 9 10 11 12 13 14 6 7 8 9 10 11 12 3 4 5 6 7 8 911 12 13 14 15 16 17 15 16 17 18 19 20 21 13 14 15 16 17 18 19 10 11 12 13 14 15 1618 19 20 21 22 23 24 22 23 24 25 26 27 28 20 21 22 23 24 25 26 17 18 19 20 21 22 2325 26 27 28 29 30 31 29 30 27 28 29 30 31 24 25 26 27 28 29 30
31
Council Meeting Holiday
May-14 June-14 July-14 August-14
Member FINRA & SIPC © 2013
First Southwest Company
CI
TY
O
F
CO
LL
EG
E
ST
AT
IO
N
City: City of College Station
Financial Advisor: First Southwest Company
Bond Counsel: McCall Parkhurst
Underwriter: Raymond James
RBC Capital Markets
BOSC Inc.
Robert W. Baird
Underwriter’s Counsel: TBD
Finance Team
7
Member FINRA & SIPC © 2013
First Southwest Company
CI
TY
O
F
CO
LL
EG
E
ST
AT
IO
N
Recipients: Winners from competitive sales in 2010 and 2011 plus unsolicited proposals in 2014.
Underwriter Request for Proposals Recipients
8
Competitive Sales:
– BOSC
– FTN Financial (no response to RFP)
– JP Morgan (no response to RFP)
– UBS
Unsolicited proposals:
– BOSC
– Piper Jaffray
– RBC
– RW Baird
– George K. Baum
Member FINRA & SIPC © 2013
First Southwest Company
CI
TY
O
F
CO
LL
EG
E
ST
AT
IO
N
Criteria:
– Takedown (Commission) (points ranked 0-8)
– Number of Brokers in Texas (points ranked 0-8)
– Number of Brokers in College Station area (points 4 points for representation)
– Texas Experience: Texas city issues, full credit to senior managers for the most recent two years based on total par amount (points ranked 0-8)
– Unsolicited Proposals (4 points)
– Competitive Sales: Full credit to senior manager for 2010 and 2011 College Station issues (4 points)
Underwriter Request for Proposals Criteria
9
Member FINRA & SIPC © 2013
First Southwest Company
CI
TY
O
F
CO
LL
EG
E
ST
AT
IO
N
Summary of Underwriter Request for Proposal
10
Brokers in Comp.College Unsolicited Sale
Station Proposals Winners(2)
Average No. Amount Point OverallFirm Takedown Rank Points Rep. Rank Points Points (in millions) Rank Points Points Points Total RankRaymond James 2.8675 1 8 531 1 8 4 1,341.77$ 1 8 28.0 1RBC Capital Markets 2.9258 2 7 130 2 7 1,049.36 2 7 4 25.0 2BOSC, Inc. 3.1316 7 2 57 3 6 540.92 4 5 4 4 21.0 3Robert W. Baird 3.0086 3 6 40 5 4 777.39 3 6 4 20.0 4
Piper Jaffray and Co. 3.0175 4 5 2 8 1 485.23 5 4 4 14.0 5Coastal Securities, Inc. 3.0498 6 3 42 4 5 148.98 7 2 10.0 6Stifel Nicolaus & Company, Inc. 3.0350 5 4 39 6 3 433.77 6 3 10.0 6George K. Baum and Co. 3.5067 8 1 0 9 0 3.90 9 0 4 5.0 8Stephens Inc. 3.5097 9 0 21 7 2 70.07 8 1 3.0 9
(1) Data from Ipreo's Muni-analytics for7/18/2012 - 7/17/2014. Data on Texas Underwriting experience with full credit of par amount acting as senior book runner.(2) Competitive winners since 2010
in TexasAverage Takedown Texas Volume(1)
City of College Station, TexasUnderwriter RFP Results
General Obligation Improvement & Refunding Bonds, Series 2014Certificates of Obligation, Series 2014
No. of Brokers