Transaction Details

Quad Cities Regional Economic Development Authority (Augustana College)

Municipal

Placement Agent

Baird served as placement agent on Augustana College’s $17,305,000 Revenue Refunding Bonds, Series 2022. Bond proceeds were used to refund the outstanding Revenue Bonds, Series 2012 (“2012 Bonds”) for debt service savings. To generate the lowest borrowing cost for the College, the bonds were issued as double tax-exempt through the Quad Cities Regional Economic Development Authority.

Baird has a long-standing relationship with the College, having been hired through an RFP and interview process back in 2012 and serving as underwriter for the College’s 2012 Bonds. Over the years, Baird provided continued service to the College which included analyzing numerous financing options, conducting credit analysis and monitoring the potential refunding of the 2012 Bonds which had a call date of October 1, 2022.

The interest rate levels and the relationship between a public offering and a private placement continuously changes with market conditions. Baird conducted a comparative refunding analysis and determined that the lowest borrowing cost could be achieved through a private placement versus a public offering with the College’s outstanding “Baa1” Moody’s rating. There was also a shorter timeline to complete a private placement which the College prioritized given the Federal Reserve’s anticipated rate hikes throughout 2022. Baird drafted a Request for Proposals to send to banks which contained detailed information on the 2022 Bonds and the College.

The College decided to contribute $4.8 million in cash to the refunding. Baird also gauged interest from banks and determined that while the College did include a Debt Service Reserve Fund (“DSRF”) in the amount of approximately $3.3 million for the 2012 Bonds, the DSRF could be released as equity to downsize the refunding. DSRF are much less common now than they were in 2012 (early post-recession) and ultimately not required by the banks.

Baird contacted a total of 23 banks including national, regional and local banks that had relationships with the College. The weeks prior to the bid due date, Baird actively communicated with the banks to provide additional information and answer detailed questions about the College’s finances, debt service coverage, enrollment, etc. Baird received a total of five bids, one of which was a local bank. The winning bid had an all-in true interest cost of 3.92% which was 30 basis points (0.30%) lower than a hypothetical public offering. As a result, the refunding generated present value savings of $1.3 million or 4.8% of the refunded par amount.

We believe this demonstrates Baird’s understanding of the municipal market and ability to provide sophisticated services on all facets of a higher education transaction.