Behind the Deal: Harmony Public Schools
Flexible and Shortened Marketing Approach Delivers Favorable Results
Harmony Public Schools was established in 1999 and opened its first charter school, Harmony Science Academy, in 2000. Today, central administration is located in the Houston area, but Harmony has expanded to all major areas of Texas, forming six regions (“clusters”) consisting of a 61 public charter schools. These schools provide rigorous, high-quality education focused on Science, Technology, Engineering, and Math. Harmony provides students from traditionally underserved communities the opportunity to excel through project-based learning where they learn the skills necessary to become a contributing global citizen.
Harmony Public Schools needed to finance and refinance the costs of acquiring, constructing, equipping, and renovating certain “educational facilities” and facilities incidental, subordinate or related thereto or appropriate in connection therewith, in addition to paying the cost of issuing the bonds.
Baird’s National Charter School Finance team served as senior managing underwriter on the $212,440,000 BBB+ (underlying rated) Texas PSF Guaranteed 30-year fixed rate financing for Harmony Public Schools. Baird recommended a flexible marketing plan designed to take advantage of a positive tone in the municipal bond market while maintaining flexibility to change the pricing date if market conditions changed. In the weeks leading into the pricing, (between May 1st and May 14th) tax exempt interest rates, as measured by the 30 year Municipal Market Data Index, declined by 30 basis points (0.30%).
Baird recommended a shortened pre-marketing period of less than a week (between the Preliminary Official Statement being sent to investors and the bond sale), hoping to capitalize on the positive market trend for the benefit of Harmony. Harmony’s Series 2024 Bonds were successfully priced on Tuesday, May 14th 2024. Baird had received over $1.1 billion in orders for Harmony’s 2024 Bonds. The strong demand and “oversubscription” allowed Baird to propose a meaningful reprice of the 2024 Bonds, lowering the yields by 5 to 10 basis points (0.05% to 0.10%) from the initial offering in those maturities with the greatest investor demand.
