SMMPA issues $76.7 million of tax exempt bonds

SMMPA issues $76.7 million of tax exempt bonds

July 10, 2009

SMMPA sold $76.7 million (par amount) of tax exempt bonds this week.  The true interest cost (TIC) of the new bonds is 4.829% and the average coupon is 5.036%. The bonds are callable in 9.5 years.

Proceeds will be used to refinance the outstanding commercial paper of $55 million with the balance refinancing 2011 – 2013 serials of outstanding 1998A bonds with a par value of $16.7 million.  The net present value (NPV) of the refunding the 1998A bonds is $0.7 million with a percentage savings of 3.8%.

John Winter, SMMPA’s Director of Finance and Accounting said “Morgan Stanley and the Co-Managers did a wonderful job.  Yields were reduced during each day reflecting favorable market conditions and successful aggressive sales efforts on the part of their municipal bond desks.  The result to the Agency and its Members is the needed financing at a very favorable interest rate.”

“The bond transaction was truly a team effort”, Mr. Winter continued.  “Mike Mace of PFM, SMMPA’s financial advisor, made several excellent contributions to the marketing strategy used during the process and provided sound and timely advice throughout the process.  Orrick, SMMPA’s bond counsel, McGrann Shea the underwriter’s counsel, and Dorsey Whitney the Agency’s General Counsel all contributed to the success of the bond sale.  Our in-house counsel and SMMPA Staff played key roles in the process as well.”

Prior to the bond sale both S&P and Moody’s affirmed SMMPA’s bond ratings of A+/Stable and A2 Stable respectively. “We’re very pleased with the ratings – especially considering the country’s current economic environment” Mr. Winter said.