The San Diego Unified School District won The Bond Buyer's 15th annual Deal of the Year award Thursday night for its $471 million sale which smashed the template for local general obligation bonds in California.
California school bonds were long rated on the strength of school districts' operating budgets, even though the special property taxes that repay the GOs aren't part of those budgets. San Diego USD and its deal team worked to convince rating agencies and investors to evaluate its GO bonds based on the dedicated taxes that support them. They sought a special legal opinion to support that paradigm shift, along with state legislation declaring local GO debt to be subject to a statutory lien. This resulted in rating upgrades that helped the deal's spreads tighten by between 18 and 37 basis points from the San Diego district's sale five months earlier.