DALLAS — Cypress-Fairbanks Independent School District, Texas, found strong demand for $115 million of variable-rate soft-put bonds Feb. 11, said Stuart Snow, associate superintendent for business, finance and technology services.
"Pricing went extremely well and better than we first anticipated," Snow said. "I am very pleased with the results."
Known in Texas as Cy-Fair, the state's third-largest district sold soft put variable-rate bonds in three tranches through a syndicate led by JPMorgan Securities. JP Morgan, which had a 40% stake in the deal, shared underwriting duties with Wells Fargo Securities, Coastal Securities Inc., RBC Capital Markets, and Piper Jaffray, each with a 15% stake.
BOSC, Inc. was financial advisor.
The one-year tranche carried an initial rate of 2% and yielded of 0.47%, Snow said. The three-year tranche has an initial rate of 3% and a yield of 0.91%. The five-year tranche has an initial rate of 3% and a yield of 1.64%. The blended yield for the three tranches was 1.2768%, Snow said.
"We issued $114.68 million at a premium which generated $120.39 million in proceeds and allows us to continue to effectively manage our debt portfolio, particularly in consideration of a possible future authorization," he added.
Snow said the first tranche was three-times oversubscribed, the second was two-and-a-half-times oversubscribed, and the third was two-times oversubscribed.
The district chose the soft-put structure to take advantage of the fixed-variable-rate spread, Snow said.
The bonds carried triple-A ratings with guarantees from the Texas Permanent School Fund. Cy-Fair's underlying ratings are AA-minus from Standard & Poor's and Aa2 from Moody's Investors Service.
The district has $1.6 billion of debt outstanding after this deal, according to Moody's. It covers about 10% of Harris County, the state's most populous county, and includes a section of Houston.
