Recent Debt Summary & Related Issues

Transcription

1 Recent Debt Summary & Related Issues Recent Financings $147,390,000 Series 2007E COPs November 2, 2007 presented by Public Financial Management 300 S. Orange Avenue, Suite 1170 Orlando. FL (407) (407) fax

2 Recent Issues Short-term Market Instability Short-term interest rates have been volatile as a result of the Credit Crisis. Florida Supreme Court rulings (see below) added additional uncertainty for Florida credits. These factors and others appear to be causing disconnects between Auction Rate and VRDO products as well as inconsistent pricing from week to week. Florida Supreme Court Ruling - Strand vs. Escambia County A number of tax increment financing cases are working through the court system. Prior Supreme Court rulings (Miami Beach for tax increment/cra financings and School Board of Sarasota County for COP financings) provided legal framework for over $14 billion in financings during the last 30 years. In both types of financings, one of the critical legal questions relates to the use of ad valorem revenues to make debt service and/or lease payments On September 6 th the Supreme Court ruled that bonds payable through tax increment financing are subject to the referendum requirement and they recede(d) from Miami Beach and the School Board of Sarasota County to the extent that they are inconsistent with our decision in this case. Applicability to COPs was very unclear. September 28 th - Supreme Court issued a revised ruling eliminating COPs and added a note to the rehearing notice clarifying the COPs are protected October 9 th Rehearing on revised ruling No final ruling to yet. 2

3 Tax Anticipation Note Series TAN - On September 26, 2007 the District conducted a competitive sale of $115,000,000. There were 14 bidders. Citi submitted the winning bid with a 4% coupon and interest cost of 3.44%. The net interest cost, including all costs of issuance is $3.86 million. The estimated interest earnings on the proceeds is $4.73 million. Moody s and S&P confirmed the short-term ratings of MIG1 and SP-1+ for the TAN. A mock sale will be scheduled with the students at our Finance Academies. 3

4 Tax Anticipation Note Series 2007 TANS 2007 Sale Summary $115,000,000 Wednesday, September 26, 2007 Bidding Firm Net Interest Cost % Net Interest Cost $ Coupon Rate Premium Amount RANK $ Spread Citigroup Global Markets % $ 3,779, % $ 603, $ - Goldman, Sachs & Co % $ 3,785, % $ 596, $ 6, Lehman Brothers % $ 3,790, % $ 592, $ 11, UBS Securities % $ 3,791, % $ 591, $ 12, Commerce Capital Markets % $ 3,792, % $ 590, $ 13, Bear Stearns & Co % $ 3,793, % $ 588, $ 14, Morgan Stanley % $ 3,793, % $ 588, $ 14, Banc of America Securities LLC % $ 3,796, % $ 586, $ 17, J.P. Morgan Securities Inc % $ 3,798, % $ 584, $ 19, Wachovia Bank % $ 3,803, % $ 579, $ 24, Merrill Lynch & Co % $ 3,817, % $ 839, $ 38, Piper Jaffray % $ 3,817, % $ 839, $ 38, First Southwest Company % $ 3,884, % $ 1,046, $ 105, A G Edwards & Sons, Inc % $ 3,889, % $ 493, $ 110,

5 Summary of Series 2007E Certificates Series 2007E - On October 17, 2007 the District successfully sold $147,390,000 Certificates of Participation, Series 2007E. The 2007E Certificates were issued in fixed-rate mode and had an All-In True Interest Cost of 4.66%. Citigroup was the senior manager. Series 2007E was the first Florida COPs deal sold since the Legislative activity involving the State Supreme Court s ruling on the Strand Case. District held an Investor Call to wake up the market since no COPs had priced in 2 months. Moody s, S&P and Fitch confirmed underlying ratings of A1, AA-, and A+, respectively, to the Series 2007E Certificates. Bond insurance quote for Series 2007E COPs was a record low of 13.8 bps. 5

6 Summary of Series 2007E Certificates COP payments use approximately 0.92 mills. Outstanding COPS Payments 300, , , , ,000 50, Existing Payments Series 2007E 1 Mill 6 Amount in thousands

7 Allocation of 2007E Certificates An aggressive retail marketing effort was implemented for the sale of the 2007E Certificates. Approximately $27 million of principal was placed through retail orders, or over 18% of the total par amount. Below is a breakdown of the underwriter allotments for the 2007E Certificates. Bond Allotments Retail Priority Member Total Underwriting Underwriting Allots Post Group Participation Orders Allotments % Orders Allotments Allocations % Orders Allotments % Orders Allotments % Citi 40.0% 14,620 13, % 122, ,055 47, % 1,795 1, % 139,120 62, % Bear Stearns 15.0% % , % 25, % 26,235 19, % UBS 15.0% 4,440 3, % , % 23, % 27,490 18, % AG Edwards 7.5% 4,160 4, % - - 6, % 36, % 40,270 11, % Merrill Lynch 7.5% 3,860 3, % , % % 4,310 19, % RBC 7.5% 1,650 1, % - - 7, % 11, % 13,540 9, % Siebert 7.5% % , % 14, % 14,500 7, % Total 100.0% 29,480 26, % 123, , , % 112,080 1, % 265, , % Allotments in $'s Retail Priority Member Total Underwriting Bond Bond Bond Bond Group Allotments Takedown % Allotments Takedown % Allotments Takedown % Allotments Takedown % Citi 13,720 55, % 47, , % 1,585 6, % 62, , % Bear Stearns 650 2, % 18,632 91, % % 19,282 93, % UBS 3,760 14, % 14,917 72, % % 18,677 86, % AG Edwards 4,135 18, % 6,876 34, % % 11,011 52, % Merrill Lynch 3,405 14, % 15,648 76, % % 19,053 90, % RBC 1,190 4, % 7,723 37, % % 9,003 42, % Siebert % 7,682 37, % % 7,682 37, % Total 26, , % 118, , % 1,675 6, % 147, , % 7

8 New Revenue Options Short Term Millage Options 2 Year for operating or capital Article VII Section 9(b), Florida Constitution; Section (1) Florida Statutes 4 Years for operating Section (6) and Section (2) Florida Statutes Other Referenda Options General Obligation Bonds Section , Florida Statutes Sales Tax Options Section , (2) Local Government Infrastructure Surtax, and (6)- School Capital Outlay Surtax Continuation of Current Sales Tax Other Funding/Construction Options Vendor financing Performance contracting Developer financing 8