DALLAS — Dallas closed on $529.4 million of bonds Dec. 22 after seeing strong demand for the highly rated issue that included new money and refunding, officials said.
"We had over $3 billion of orders," said Wayne Placide senior vice president at financial advisor First Southwest Co. "In some maturities it was oversubscribed by 10 to 15 times. We hit the market at a good time."
The deal priced Dec. 9 through book runner Wells Fargo Securities and co-senior managers Loop Capital Markets and Stern Brothers & Co. This was the first Dallas deal in which Stern Brothers had served as co-senior manager, according to the firm's owner, Pepe Finn.
Corrine Steeger, treasury manager for the city, said the true interest cost on the deal came to 2.71% and that net present value savings on the refunding portion was $21 million or 8.59% of the refunded bonds.
Despite high volume in the market, investors were attracted to the high ratings of the Dallas deal along with the city's general obligation pledge, Placide said. This was the city's only issue of 2014.
"It was the week when we had volume of about $13 billion," Placide said. "I think the market reception to the transaction was a reflection of the fact that it was a GO with a very high credit rating."
The bonds carry Dallas's general obligation ratings of AA-plus from Standard & Poor's and Aa1 from Moody's Investors Service.
"The Aa1 reflects improvement in key credit fundamentals including a strong local economy with the largest employment base in the metropolitan area, recovery and recently strong growth in taxable values driven by residential and commercial construction, and improved fiscal performance marked by three recent years of audited General Fund surpluses," Moody's analyst Adebola Kushimo wrote Nov. 13.
With this deal, Dallas will have about $1.8 billion of GO debt outstanding, according to Moody's.
