Transaction Details

City of Corpus Christi

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On May 16, 2024, Baird served as senior managing underwriter to the City of Corpus Christi (the “City”) on its Series 2024 General Improvement Bonds, Series 2024A Certificates of Obligation and Series 2024B Taxable Certificates of Obligations (the “Obligations”). Proceeds from the sale of the Obligations will be used for various public improvement projects including streets, parks, and facilities. The final maturity for the Obligations is fiscal year 2044.

Overnight ahead of pricing, Treasuries were stronger but by morning had drifted back upward to Wednesday’s closing levels after import price data exceeded expectations and the Fed indicated progress on inflation has slowed. The Taxable Certificates of Obligation were relatively small in size totaling $10.5 million in par. Those Certificates were priced on a yield basis, and with tailwinds from strong taxable demand in prior weeks, we were able to build a nice book of business with 1-3x subscription even as Treasuries sold off 5-7 basis points. All non-callable taxable bonds were sold with a 6% coupon to increase production for the City’s improvement projects.

Interest in the two tax-exempt series, as well as other tax-exempt Texas transactions pricing that day, was tepid. Issuance had been heavy throughout late April and early May, and a number of accounts were reaching capacity in Texas paper. Investors also expressed concern that benchmark rates had become inflated. We saw a pocket of strong demand in the 2030 and 2031 maturities, but interest throughout the order period remained limited beyond those maturities. With continued sales efforts, we secured an institutional order for the remaining balances at an adjusted price 6-9 basis points wider to the original spread, which was relatively attractive to other prospective investors seeking 12-13 basis points in additional yield. To finalize the transaction, Baird underwrote outstanding balances in years 25-28 totaling $7.6 million. The true interest cost on the tax-exempt series was 3.88%, and the true interest cost on the taxable series was 5.33%.