$557M Public Improvement Bond Deal Yields $49M Savings
Deal Shows Houston's Continued Strong Investor Demand
March 23, 2016 -- Houston City Controller Chris Brown announced that a March 22 bond refinancing of $506.7 million of the City’s Public Improvement bonds will generate approximately $49.1 million Net Present Value savings. The sale encompassed $107 million in commercial paper refunding.
"This was a good day, especially in the light of Moody's and S&P's downgrades," says Houston City Controller Chris Brown. "As evidenced by the market's favorable reaction to the bond sale, Houston continues to be a terrific investment. Our active investor outreach appears to have paid off handsomely. At this time of City budget challenges, it is very rewarding to realize this kind of savings, $10 million in our next fiscal year. These are General Fund savings that translate directly into services for the citizens.
"A downgrade -- even though our ratings remain enviable -- is a psychological blow, and this refunding reaffirms the city's many positives: our population growth, home sales and increasingly diverse economy," says Brown. "There's no question that oil prices are impacting us, but we've been through recessionary periods before (four significant ones in the past 30 years) and Houston has always rebounded. The city's critical tasks now are to address our pension liability, the budget shortfall, and our mandated revenue cap."
Loop Capital Markets is the senior manager on the deal. Co-managers include Wells Fargo Securities, FTN Financial Capital Markets, Jefferies, RBC Capital Markets and Stifel, Nicolaus & Company, Inc. Financial advisors are First Southwest and TKG & Associates LLC. Bracewell LLP and Baker Williams Matthiesen LLP are co-bond counsel.