Transaction Details

Town of Clayton

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The Town of Clayton (the “Town”) is located in the Raleigh-Cary Metropolitan Area in Johnston County and lies within close proximity to the Raleigh-Durham Airport and Research Triangle Park areas. The Town’s population growth rate has exceeded the rate for both the state and county, averaging 4.23% per year, with current population estimates ranging from 30,000-31,000. The Town’s main industry is manufacturing with a focus in biopharmaceuticals, which continues to expand in the area. The Town holds 10% of the biopharmaceutical jobs in North Carolina and is secondarily supported by strong activity in the healthcare and retail trade industries.

The Water and Sewer Revenue Bonds, Series 2022 (the “Series 2022 Bonds”) is one part of a multifaceted capital plan which includes State Revolving Fund (SRF) loans, State Appropriations and Revenue bonds. Proceeds from the Series 2022 Bonds, which closed on December 20, 2022, will be used to make certain improvements to the Town’s water and sewer system facilities (the “System”), including design, acquisition, construction, and equipping of the Sam’s Branch Water Reclamation Facility and associated conveyance infrastructure program, and other capital improvements to the System that are part of the Town’s capital improvement program. Baird was brought into this transaction due to our strong track record as a leading underwriter of water and sewer revenue bonds in North Carolina, our experience in the state and marketing conversations had with the town and their municipal advisor about previous water and sewer engagement with similar issuers.

Baird’s underwriters and salespersons actively pre-marketed the Series 2022 Bonds, targeting trust departments, separate managed accounts, and institutional investors, and receiving feedback that Baird’s underwriter, Bryan Derdenger, incorporated into his scale. On pricing day, the treasury market was stable. This combined with the limited supply of North Carolina paper that has been issued in 2022 and our premarketing efforts resulted in heavy demand for the deal. Likewise, national supply was limited in the weeks leading up to the sale, which attracted non-state specific money to the deal. The final term is 2047 with most maturities structured with 5% coupons, which resulted in significant demand from SMAs, mutual funds, and other money managers. The remaining maturities 2041-2043 and a term in 2047, had 4% coupons and saw significant demand. Baird generated over $812 million in orders, an 8.5x oversubscription. In fact, the 2047 bonds saw particularly strong demand, resulting in a 13.7x oversubscription. This heavy demand enabled our underwriters to reprice the oversold maturities – with reductions of as much as 13 basis points (0.13%) – resulting in additional debt service savings of $1.28 million from the previous premarketing scale. Baird’s pricing enabled the Town of Clayton to achieve a true interest cost of 3.87%.