BRADENTON, Fla. - Tennessee won the best pricing in 15 years on $345 million of bonds this week, a state official said.
Some $1.6 billion in orders were placed for $213 million of tax-exempt higher education revenue refunding bonds that priced Wednesday, oversubscribing that part of the deal by 7.6 times.
Some 448 orders were placed for $104 million of taxable bonds, oversubscribing that portion of the deal by 4 times. Another $28 million of taxable bonds were sold by sealed bid.
"All I know is there was a huge appetite for this bond sale," said Sandra Thompson, director of the Office of State and Local Finance. "This was an amazing transaction. It was unprecedented."
Buyer interest was so great in the $213 million tax exempt Series B refunding bonds that they were repriced lower between 5 basis points and 10 basis points on most maturities, Thompson said.
The true interest cost for the Series B bonds was 2.81%, compared to the average coupon of 4.8% on the refunded bonds. The net present value savings was $17.86 million or 7.8% of refunded par.
"The reason why we entered the market was to refund the bonds, and we thought we had a lot of good candidates" for refinancing," she said.
With low supply and high demand, Thompson said, "there was a lot working to our advantage."
Proceeds of the $132 million in taxable Series A bonds were sold to prepay a revolving line of credit and to refund all or portions of 2005A and 2007B bonds.
The true interest cost on the taxable portion was 3.59%. The net present value savings on the $65 million refunding was $6 million or 9.37%.
"We were very, very pleased with the results," Thompson said about the pricing overall. "Tennessee is a real good, attractive credit, and we're not in the market very often."
The bonds were rated AA-plus by Fitch Ratings, Aa1 by Moody's Investors Service, and AA by Standard & Poor's. All have stable outlooks.
The syndicate for the sale was Citi, the book-runner, plus JPMorgan, Raymond James & Associates Inc., and SunTrust Robinson Humphrey.
Public Financial Management Inc. was the financial advisor.
Hawkins Delafield & Wood LLP was bond counsel. Bass Berry & Sims PLC was counsel to the underwriters.
