In July 2020, Uplift Education (Dallas and Ft. Worth) sold $28.7 million in bonds through the Arlington Higher Education Finance Corporation.\u00a0 The bonds carried an underlying rating from S&P Global of BBB-, and from Moody’s Investors Service of Baa2.\u00a0 Uplift added the Moody’s rating this year and received the Baa2 rating.\u00a0 So, with both agency’s rating qualifying Uplift for the Texas Bond Guarantee program under the PSF, the bonds carried both agencies’ enhanced rating and were rated AAA\/Aaa.<\/p>\n
Continuing the trend of well-timed issues, Uplift came to market after weeks and weeks of inflow into the municipal bond funds.\u00a0 The first few months of the pandemic saw the muni market experience severe disruption, but over the last few months,\u00a0 the muni market has stabilized and even improved.\u00a0 Spreads are now approaching the pre-pandemic levels of February 2020.<\/p>\n
Uplift was able to structure their longer bonds using a discount structure, meaning sold at less than 100 cents on the dollar, versus the more-often used premium structure, where bonds are sold at more than 100 cents on the dollar.\u00a0 Under a premium structure, the yield to maturity contains a “kicker”, resulting in a higher yield than a par or discount structure, because the premium is amortized to the 10-year call date instead of to maturity.\u00a0 This protects investors from not recouping the cost of the premium if their bonds are called away in ten years.\u00a0 But it also has the effect of increasing the cost of the structure to maturity for the borrower since the higher coupon associated with premium bonds remains even though the premium has been fully amortized.<\/p>\n
Investors like premium bonds because it gives them extra cash-flow from the higher coupon.\u00a0 Borrower’s like premium bonds because they can issue less debt to raise the same amount of proceeds and they may have more ability to refinance the higher coupons for savings in the future.\u00a0 But, given the overall level of interest rates, positioning Uplift for a possible (but not for sure) refunding in the future was less desirable, reducing the attractiveness of paying the “kicker” associated with the premium bonds.<\/p>\n
For a 30-year issue, Uplift garnered a 2.37% True Interest Cost (TIC), in part due to the discount structure on the bonds and the 2% coupons such a structure were able to achieve.\u00a0 This compares favorably to the TIC of some other PSF-backed transactions sole earlier in July, as well as compared to an issue which sold the day after Uplift’s deal.<\/p>\n
Uplift will use the proceeds to fund improvements to Uplift Elevate Preparatory and to Uplift Summit Feeder academy.\u00a0 At the time the bonds were priced, there remained uncertainty about how school would open in the Fall, online or in person (or some combination).\u00a0 Uplift was able to explain their detailed and common-sense approach to delivering education very successfully to both rating agencies as well as investors.<\/p>\n
Buck Financial Advisors LLC served as Municipal Advisor on the transaction.\u00a0 Robert W. Baird served as underwriter, McCall, Parkhurst and Horton LLP served as bond counsel, Quarles & Brady LLP served as underwriter’s counsel, and Winstead PC served as borrower’s counsel.\u00a0 Congratulations to the students, families, staff and Board of Uplift on their tremendous results, both in the classroom and in the capital markets.<\/p>\n","protected":false},"excerpt":{"rendered":"
In July 2020, Uplift Education (Dallas and Ft. Worth) sold $28.7 million in bonds through the Arlington Higher Education Finance Corporation.\u00a0 The bonds carried an underlying rating from S&P Global of BBB-, and from Moody’s Investors Service of Baa2.\u00a0 Uplift added the Moody’s rating this year and received the Baa2 rating.\u00a0 So, with both agency’s… read more<\/a><\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-362","post","type-post","status-publish","format-standard","hentry","category-uncategorized"],"_links":{"self":[{"href":"https:\/\/www.buckfinancial.net\/blog\/wp-json\/wp\/v2\/posts\/362","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.buckfinancial.net\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.buckfinancial.net\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.buckfinancial.net\/blog\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.buckfinancial.net\/blog\/wp-json\/wp\/v2\/comments?post=362"}],"version-history":[{"count":3,"href":"https:\/\/www.buckfinancial.net\/blog\/wp-json\/wp\/v2\/posts\/362\/revisions"}],"predecessor-version":[{"id":365,"href":"https:\/\/www.buckfinancial.net\/blog\/wp-json\/wp\/v2\/posts\/362\/revisions\/365"}],"wp:attachment":[{"href":"https:\/\/www.buckfinancial.net\/blog\/wp-json\/wp\/v2\/media?parent=362"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.buckfinancial.net\/blog\/wp-json\/wp\/v2\/categories?post=362"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.buckfinancial.net\/blog\/wp-json\/wp\/v2\/tags?post=362"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}