Transaction Details

Comal Independent School District

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Baird served as the senior manager on the District’s $465.77 million new money and refunding financing in October 2024. Baird had been monitoring the District’s debt and provided the District and their municipal advisor refinancing opportunities of the Series 2015A and Series 2015B Bonds. With Baird’s strong lead performance on the District’s Series 2023 financing, Baird was awarded to serve as the lead bookrunner on the District’s financing.

Pricing was moved up a week from the initial timeline to Tuesday, October 22^nd and we were able to quickly make the adjustment without any issues. Baird worked closely with the District’s municipal advisor and began pre-marketing on the prior Friday. The 25-year issuance was initially structured with 5% serials for maturities 2025-2038 and 2043-2044, 3% serials for maturities 2039-2042, and 4% term bonds due in 2049. While 3% discount couponing had not been a prevailing structure for Texas ISDs, Baird identified a subset of buyers who needed to extend portfolio duration with high-quality intermediate term paper. Integrating 3% couponing at these maturities reduced the District’s expected current cost of borrowing and increased refunding savings.

The day before pricing pre-election volatility seemed to be in motion. In the absence of economic data or other major news, benchmark MMD yields increased 3-7 basis points (“bps”). By the day of pricing, an early MMD read indicated additional increases to yields, leading to yet another tough day in the municipal market.

The transaction saw good reception at the front of the curve, at the back of the curve and for the 3% serial bonds during the order period. However, interest was tepid for the 5% coupons maturing 2030 and longer. Baird marketed additional 3% coupons in 2038, 2042-2043 to build demand and received excellent reception. Remaining balances were worked after the order period. Baird, as the No. 1 lead managing underwriter collectively by issues since 2009 according to S&P Muni Deal Query as of December 31, 2023, leveraged its robust distribution network to book $1.25 billion in orders from 58 unique investors, with 14 of those investors placing $483 million in orders for the 3% maturities.

Baird successfully repriced the existing 3% maturities 2 bps lower, 5% maturities 2025-2026 3 bps lower, the 5% maturities 2027-2038 and 2044 only 2 to 6 bps higher, and no change in the 2049 term bond. By way of comparison with two similar transactions that day, common 5% maturities priced 3 to 7 bps lower than the negotiated sale of Tomball ISD (Moody’s Aa1 / S&P AA+ / PSF Enhanced) and -4 to 12 bps lower than the competitive sale of Highland Park ISD (Moody’s Aaa / Fitch AAA / PSF Enhanced). The true interest cost for the District’s financing was finalized at 3.80%, and it realized $10.3 million in net present value savings from the refunding component.