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HomeMy WebLinkAbout(P1) City of Port Arthur TX Transaction Summary final 08 15 22Member FINRA / SIPC / NYSE © 2022 Hilltop Securities Inc. All Rights Reserved Contacts Transaction Summary Anne Burger Entrekin Regional Managing Director anne.burgerentrekin@hilltopsecurities.com 70 Northeast Loop 410, Suite 710 San Antonio, Texas 78216 Direct:210.308.2204 August 16, 2022 City of Port Arthur, Texas Homer Maldonado Analyst Homer.Maldonado@hilltopsecurities.com 70 Northeast Loop 410, Suite 710 San Antonio, Texas 78216 Direct:210.308.2207 Member FINRA / SIPC / NYSE © 2022 Hilltop Securities Inc. All Rights Reserved Rating Update Member FINRA / SIPC / NYSE © 2022 Hilltop Securities Inc. All Rights Reserved Key Credit Metrics include: •Strong Budgetary Performance; •Very Strong Budget Flexibility; •Very Strong Liquidity; •Strong management;and •Strong institutional framework. “Strong budgetary performance with excess revenue available for capital outlay” “Management attributes the operating surplus to better-than-budgeted revenue growth and underspending.” “…given the city's growing tax base and low tax rate,we expect debt burden to remain manageable despite additional debt plans.” Credit Rating Commentary “Consistent tax revenue growth and underspending of the budget have allowed the city to cash-fund capital projects, somewhat reducing debt financing needs.” “A+”/Stable Outlook 2 Member FINRA / SIPC / NYSE © 2022 Hilltop Securities Inc. All Rights Reserved Rating Agency Focus 3 Ability Willingness Governance and Management Economy FinancesDebt Member FINRA / SIPC / NYSE © 2022 Hilltop Securities Inc. All Rights Reserved Certificates of Obligation, Series 2022 Member FINRA / SIPC / NYSE © 2022 Hilltop Securities Inc. All Rights Reserved Bid for Certificates of Obligation, Series 2022 5 _________________________ (1)The bid from the Underwriters includes a Premium of $670,337.Premiums are very common due to investor preference and are used as a Project Fund Deposit. The bid from the Underwriters results in a True Interest Cost of 3.64% Member FINRA / SIPC / NYSE © 2022 Hilltop Securities Inc. All Rights Reserved Projections versus Bid for Consideration Results True Interest Cost is 61 basis points or 14.35% less than projections Average Annual Debt Service is $45,703 lower than projections Total Debt Service over the life of the COs is $914,069 less than projections Deposit to Project Fund is $180,000 more than projections Projected Series 2022 COs(1) Bid for Series 2022 COs Par Amount of Bonds $10,000,000 $9,565,000 Deposit to Project Fund $9,820,000 $10,000,000 True Interest Cost 4.25%3.64% Total Debt Service $14,797,707 $13,883,638 6 ____________ (1)Projections as of May 24, 2022 Member FINRA / SIPC / NYSE © 2022 Hilltop Securities Inc. All Rights Reserved Summary Member FINRA / SIPC / NYSE © 2022 Hilltop Securities Inc. All Rights Reserved Investors Who Submitted Orders on the Obligations Institutional Investors –Baird Investment Management –Belle Haven Investments –Chilton Investment Company, Inc. –CL King & Associates –Commerce Bank, N.A. –Fiduciary Trust –Mai Capital Management, LLC –Taylor Advisors –Thornburg Investment Management –Zeus Financial LLC 8 Retail Investors Member FINRA / SIPC / NYSE © 2022 Hilltop Securities Inc. All Rights Reserved Summary We recommend the City approve the bid from Loop Capital Markets and Raymond James Certificates of Obligation o The True Interest Cost of 3.64%is lower than the projected interest rate of 4.25%by 14.35%or 61 basis points We want to express our appreciation to the City Staff,Mr.Burton,Ms.Daniel, and Ms.Tizeno in particular,for all their assistance in making this a successful process and transaction Thank the Bond Counsel,Derrick Mitchell with Holland &Knight LLP,for their efforts Thank the Underwriters,Loop Capital Markets and Raymond James,along with their Underwriter’s Counsel,Greenberg Traurig LLP,for their efforts Thank the City for the honor of serving Port Arthur as its Financial Advisor;we appreciate our long-term relationship 9 Member FINRA / SIPC / NYSE © 2022 Hilltop Securities Inc. All Rights Reserved Market Update Member FINRA / SIPC / NYSE © 2022 Hilltop Securities Inc. All Rights Reserved Bond Buyer’s Index of 20 Municipal Bonds 11 Member FINRA / SIPC / NYSE © 2022 Hilltop Securities Inc. All Rights Reserved Bond Buyer’s Index of 20 Municipal Bonds 12 Member FINRA / SIPC / NYSE © 2022 Hilltop Securities Inc. All Rights Reserved Historical Interest Rates 13 Going back to 1981 when the Bond Buyer’s Index of 20 Municipal Bonds was started, interest rates have been higher 92.35% of the time than current interest rates Member FINRA / SIPC / NYSE © 2022 Hilltop Securities Inc. All Rights Reserved MMD Yield Curve 14