Transaction Details

City of Springfield

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Following a competitive RFP process, Baird was selected to be in the City’s pool of underwriters and was appointed as senior managing underwriter on the City’s issuance of $25,160,000 General Obligation Refunding and Improvement Bonds, Series 2024. Proceeds were used to refund outstanding bonds for debt service savings, finance three new fire stations and acquire equipment for the City.

With the Federal Reserve meeting on Wednesday, July 31, it was Baird and the City advisor’s recommendation to price the Bonds the following Tuesday, August 6 to give investors a few days to digest the commentary at the Fed meeting in case there was positive discussion around a potential rate cut this fall. Between the Fed meeting on July 31 and the pricing of the Bonds on August 6, the “AAA” MMD Index decreased 28-30 basis points (0.28-0.30%) in the years the City sold bonds.

As a result of our premarketing efforts, during the order period we received $87,820,000 in orders (3.5x the par amount) with oversubscriptions in every maturity up to 5.8x. Because of the oversubscriptions, Baird was able to tighten (lower) interest rate spreads in 8 of 10 maturities by 2 to 5 basis points (0.02%-0.05%). We received orders from 16 different investors which were all new bondholders to the City’s general obligation bonds.

Between the market movement and Baird’s price adjustments, the City’s overall borrowing cost lowered by approximately $197,000 or 0.15% between the start of our pre-marketing efforts on Friday, August 2 to Tuesday, August 6. In the two days after the City sold bonds, the MMD index actually increased by 10-16 basis points (0.10%-0.16%) meaning we timed the pricing perfectly.

The refunding component generated gross debt service savings of $690,000 and present value savings of $646,000 or 5.42% of the refunded par for the City. The transaction achieved a true interest cost of 3.11% over the 10-year term.