KNN Assists Santa Clara County with its Competitive Sale of $164 million in Lease Revenue Bonds
 
2018-10-04 • KNN PUBLIC FINANCE
 

On Wednesday, September 12th, serving as the Santa Clara County Financing Authority's ("County") Municipal Advisor, KNN advisors assisted the County with a competitive sale of $164 million in Lease Revenue Bonds (County Facilities Projects) 2018 Series A ("2018 Series A LRBs").

 

The morning of the sale the County benefited from a stable tone in the market reflected in a Producer Price Index ("PPI") below consensus which yielded lower interest rates. Due to the County's strong credit profile (S&P 'AA+' & Fitch 'AA'), the 2018 Series A LRBs were met with high investor demand. The transaction received a total of eight (8) bids, highlighting the strong and competitive demand for high-quality California tax-exempt bonds. Please see the graph below for additional competitive sale bidder details:

 


The winning bid was awarded to Morgan Stanley with a True Interest Cost ("TIC") bid of 3.4198% (final maturity date 2044) resulting in an estimated cost savings of approximately $3,842,029 over the highest received bid. The transaction priced at very aggressive spreads to the benchmark “AAA” MMD Index, which is indicative of the strong market for California bonds. The non-callable maturities priced 19-24 basis points below the “AAA” MMD Index. The transaction successfully closed on September 26th.

 

Proceeds of the sale will provide nearly $164 million of funding to reimburse the County for costs related to the acquisition of four (4) buildings to be used for various County purposes. This sale comes on the heels of the County's successful sale of $55.09 million in Refunding Lease Revenue Bonds which closed on August 21st. The refunding transaction produced approximately $4.7 million of present value savings, or about 6.5% of the par amount of refunded bonds.

 

Should you have any questions regarding this transaction please contact David Leifer or Bobby Cheung, who served as the lead financial advisors on the sale.

 

David Leifer
Senior Managing Director

dleifer@knninc.com

 

Bobby Cheung
Director 

bcheung@knninc.com