El Paso County Hospital District

Transcription

1 Contact: Christopher Janning Managing Director 1201 Elm Street Suite 3500 Dallas, TX El Paso County Hospital District Phone: Bond Refinancing Analysis Update March 1, 2017

2 Table of Contents Summary of Key Assumption Illustrated Results July 2016 Illustrated Results Current Situation Tab A Tab B Tab C

3 Summary of Key Assumptions Tab A

4 Key Assumptions The District has outstanding Series 2008A general obligation bonds that are callable at the District s option on or after August 15, 2018 The Series 2008A Bonds bear interest at interest rates ranging from 4.50% to 5.00% Tax law allows issuers of tax-exempt bonds to refinance their bonds in advance of the call date one time ( Advance Refunding ) The District has not yet advance refunded the Series 2008A bonds and is therefore eligible to consider doing so If the District elects to advance refund the Series 2008A bonds, new bonds at lower interest rates will be sold The proceeds from the new bond issue will be used to establish an escrow account to pay the scheduled interest payments on the refinanced 2008A Bonds until the call date and to redeem all of the refinanced principal value of the 2008A Bonds on the call date (and to pay all transaction costs) The refinanced 2008A bonds are then legally defeased (are removed from the District s balance sheet) and the new Series 2016 Bonds become debt of the District 3

5 Illustrated Results - July 2016 Tab B

6 Proposed Annual Debt Service Savings* *Based on rates as of June 9, 2016 Date Prior Debt Refunding Debt Service Service Savings Present Value to % 9/30/2016 2,662, ,491, , , /30/2017 5,324, ,519, , , /30/2018 5,324, ,519, , , /30/2019 7,674, ,789, , , /30/2020 7,671, ,785, , , /30/2021 7,673, ,786, , , /30/2022 7,673, ,786, , , /30/2023 7,666, ,780, , , /30/2024 7,672, ,783, , , /30/2025 7,668, ,783, , , /30/2026 7,667, ,781, , , /30/2027 7,673, ,787, , , /30/2028 7,668, ,780, , , /30/2029 7,674, ,789, , , /30/2030 7,674, ,789, , , /30/2031 7,670, ,785, , , /30/2032 7,671, ,783, , , /30/2033 7,666, ,778, , , /30/2034 7,671, ,783, , , /30/2035 7,674, ,785, , , /30/ ,415, ,529, , , /30/ ,416, ,526, , , /30/ ,414, ,525, , , ,968, ,452, ,516, ,922,

7 Proposed Summary of Refinancing Results* Dated Date 7/20/2016 Delivery Date 7/20/2016 Arbitrage yield % Escrow yield % Value of Negative Arbitrage 4,286, Bond Par Amount 106,135, True Interest Cost % Net Interest Cost % All-In TIC % Average Coupon % Average Life Weighted Average Maturity Par amount of refunded bonds 107,840, Average coupon of refunded bonds % Average life of refunded bonds Remaining weighted average maturity of refunded bonds PV of prior debt to % 133,298, Net PV Savings 13,923, Percentage savings of refunded bonds % Percentage savings of refunding bonds % *Based on rates as of June 9,

8 Illustrated Results - Current Situation Tab C

9 Illustrated Interest Rate Movements 8

10 Proposed Annual Debt Service Savings* *Based on rates as of February 27, 2017 Date Prior Debt Refunding Debt Service Service Savings Present Value to % 9/30/2017 2,662, ,471, , , /30/2018 5,324, ,129, , , /30/2019 7,674, ,304, , , /30/2020 7,671, ,301, , , /30/2021 7,673, ,307, , , /30/2022 7,673, ,307, , , /30/2023 7,666, ,296, , , /30/2024 7,672, ,304, , , /30/2025 7,668, ,300, , , /30/2026 7,667, ,300, , , /30/2027 7,673, ,307, , , /30/2028 7,668, ,301, , , /30/2029 7,674, ,308, , , /30/2030 7,674, ,305, , , /30/2031 7,670, ,299, , , /30/2032 7,671, ,304, , , /30/2033 7,666, ,299, , , /30/2034 7,671, ,304, , , /30/2035 7,674, ,308, , , /30/ ,415, ,046, , , /30/ ,416, ,050, , , /30/ ,414, ,046, , , ,644, ,905, ,739, ,098,

11 Proposed Summary of Refinancing Results* Dated Date 3/23/2017 Delivery Date 3/23/2017 Arbitrage yield % Escrow yield % Value of Negative Arbitrage 3,900, Bond Par Amount 103,040, True Interest Cost % Net Interest Cost % All-In TIC % Average Coupon % Average Life Weighted Average Maturity Par amount of refunded bonds 107,840, Average coupon of refunded bonds % Average life of refunded bonds Remaining weighted average maturity of refunded bonds PV of prior debt to % 119,489, Net PV Savings 5,099, Percentage savings of refunded bonds % Percentage savings of refunding bonds % *Based on rates as of February 27,

12 Comparison of 2016 to Present July 2016 March 2017 Delivery Date Bond Par Amount True Interest Cost All-In TIC Average Life 7/20/2016 3/23/ ,135, ,040, % % % % Percentage savings of refunded bonds Percentage savings of refunding bonds Gross Savings Net PV Savings Value of Negative Arbitrage Par amount of refunded bonds % % % % 19,516, ,739, ,923, ,099, ,286, ,900, ,840, ,840,

13 Other Considerations Bond Ratings S&P confirmed it s A- rating with a negative outlook Cited weakened balance sheet with the rating agency s belief that supplemental payments will remain low, limiting the District s ability to replenish liquidity reserves Hilltop Securities, Bank of America Merrill Lynch and management have initiated discussions with Moody s related to establishing a third bond rating We believe that any Moody s rating of A1 or higher will decrease the interest cost on the refunding bonds and increase annual debt service savings Each 1 basis point (0.0001%) of decreased interest cost increases NPV savings by approximately $80,000 Moody s historically rated the District A1 Authorizing resolutions Due to higher interest rates, we are asking both the District board and the County Commissioners Court to adjust the authorized parameters to sell the refunding bonds TIC not to exceed 4.15% NPV savings of at least 3.50% of refunded par value 12