Transaction Details

Trinity River Authority of Texas

---

On Tuesday, September 17, 2024, Baird served as senior managing underwriter to the Trinity River Authority (the “Authority”) on its Red Oak Creek System Series 2024 Revenue Improvement and Refunding Bonds (“the Bonds”). Proceeds from the sale of the Bonds will be used for the purpose of providing funds to refund a portion of outstanding revenue bonds relating to the Authority’s Red Oak Creek System (the “System”) and to acquire and construct improvements and extensions to the System. The Bonds were structured serially from 2025 to 2035 and termed in 2037, 2039, 2041 & 2044, and they were wrapped with BAM insurance to enhance marketability after recently being placed on negative outlook from S&P.

The Bonds were originally scheduled to price Tuesday, September 24. After discussions with the Authority and its municipal advisor, it was determined that pricing the Bonds on Tuesday the 17th ahead of the Federal Reserve FOMC statement scheduled for the 18th would be best to avoid uncertainty around potential interest rate volatility. Further, fewer competing transactions were expected on the calendar for the week of the Fed’s announcement.

While the municipal market had been relatively stable prior to pricing, the tone on the morning of 9/17 was weaker with some Texas issues seeing increases in pre-marketing levels. Baird maintained pre-marketing levels for Authority’s issue except for increases in yield to the 5% term bonds due 37, 39 & 41 by 3 basis points. Early in the order period, Baird received a strong order for all bonds maturing 2025 through 2039. An order for the 2041 term bonds was received shortly thereafter, and all bonds were 1-3x subscribed by the end of the order period. Baird successfully repriced the $1.54 million 4% term bonds due 2044 (3x subscribed) 5 basis points lower to finalize the transaction.

Final pricing levels for the Bonds were favorable relative to similar issues pricing that day. Common maturities of the Bonds priced 2-5 basis points lower than the Calhoun County Certificates of Obligation (S&P “AA-”), and 7 to 14 basis points lower than the City of Palmview Certificates of Obligation (S&P “A+” | BAM Insured). Common maturities of the Bonds priced at levels only 1-3 bps higher than a significantly larger $93.3 million City of Laredo Waterworks and Sewer System Revenue Bond issue (“Aa3” Moody’s/ “AA-” S&P) sold the day prior. The true-interest cost for the Bonds was finalized at 3.69%.