Barclays Wins Stamford BABs

Stamford went with taxable Build America Bonds last week in a competitive $50 million general obligation deal that called for both tax-exempt and BAB bids. Barclays Capital won the bonds with a 4.739% true interest cost bid that netted out to 3.09% when the federal 35% interest cost subsidy was factored in. With the subsidy, the true interest cost was 29 basis points lower than the lowest tax-exempt bid — 3.38% — submitted by Merrill Lynch & Co.

The bonds, with a final maturity in 20 years, priced on July 28, a day in which 20-year Treasuries yielded 4.54%.

It the first BAB issue in Connecticut, according to Thomson Reuters. Some $19 billion of BABs have been sold nationwide since the program was created under the federal stimulus act.

The city will pay $2 million less in interest payments over the 20-year bond issue compared to the lowest tax-exempt bid, for a net present-value savings of about $1.3 million, said Barry Bernabe, vice president at Webster Bank, which served as financial adviser on the deal.

There six BAB bids compared to three tax-exempt bids.

Ipreo’s electronic bidding service Parity has reported that more than three dozen issuers have done competitive bond deals that compared tax-exempt bids and taxable BAB bids.

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