Transaction Details

Legacy Traditional Schools

---

Aggressively Priced Investment Grade Charter Defeats High Yield Spreads

Legacy Traditional Schools is a system of charter schools currently operating in Arizona and Nevada serving approximately 24,900 students in grades K-8 on 21 campuses and an Online Academy in Arizona and three campuses in Nevada. Their mission is to provide motivated students with the opportunity to achieve academic excellence in an accelerated, back-to-basics, safe learning environment taught by caring, knowledgeable and highly effective educators in cooperation with supportive, involved parents.

To continue their mission, Legacy Traditional Schools wanted to refund for savings its outstanding Education Facility Revenue Bonds, Series 2014A, fund a deposit to the existing Obligation Debt Service Reserve Fund for the Master Reserve Obligations and in turn, the Series 2024 Bonds; and pay issuance expenses related to the Series 2024 Bonds.  The refunding resulted in a gross savings of approximately $19.4 million, and a present value savings of $11.67 million, over the remaining 20-year life of the bond issue.

Baird’s National Charter School Finance team served as sole managing underwriter on the $64,655,000 BBB- rated (10-, 15- and 20-year terms) transaction for Legacy Traditional Schools. On the day of pricing, Baird’s underwriting desk went out with knowingly aggressive levels and the order period reflected that. Investors had the greatest interest in the 20-year term bonds, and it took some time to move the final bonds. Given how high yield spreads have compressed, coupled with this being an investment grade charter, the tight levels eliminated several typical investor participants. In total, 13 different accounts participated, 11 of them being in the 20-year term bond.