City of Round Rock

Background

The City of Round Rock, Texas, is one of Central Texas’ fastest growing and most economically diverse communities, located approximately 15 miles north of Austin along the Interstate 35 corridor. Supported by a broad tax base that includes technology, healthcare, retail, hospitality, and advanced manufacturing, the City continues to demonstrate strong long-term financial performance and sustained economic growth.

To support its long-term financial objectives, the City issued $23,055,000 General Obligation Refunding Bonds, Series 2026. The financing refunded portions of the City’s outstanding Series 2016, 2017, and 2018 obligations and carried a AAA rating from S&P with serial maturities extending through 2040.

Opportunity

The City entered the market during a particularly active issuance period for Texas municipal borrowers. Several large Texas transactions were scheduled to price the same day amid broader market volatility and weaker municipal market conditions that created pressure across the market.

While several competing transactions adjusted pricing ahead of their order periods, the financing team determined that Round Rock’s strong credit profile and AAA rating positioned the City well to enter the market without making early adjustments to preliminary pricing. The goal was to preserve execution for the City while evaluating investor demand in real time.

Implementation

Baird served as Senior Manager on the transaction and worked closely with the City and its municipal advisor throughout the pricing process.

The order period developed gradually as investors balanced multiple Texas transactions competing for attention during the session. As orders developed, several accounts indicated interest at levels modestly above preliminary pricing. Based on investor feedback, Baird worked with the municipal advisor to adjust pricing and support continued distribution throughout the trading session.

Solution

The financing team combined disciplined market strategy with active investor engagement to successfully position the transaction during a difficult market session. By maintaining preliminary pricing entering the order period, the City preserved flexibility to assess investor demand before making targeted adjustments.

As investor demand became clearer during the order period, the underwriting team responded quickly with targeted pricing adjustments that aligned with prevailing market conditions while continuing to support participation across the maturity schedule. After the repricing Baird underwrote approximately 65% of the bonds to secure the savings target for the City and to exit the growing volatile market.  After Baird’s purchase of the bonds, MMD cut 3 to 5 basis points across the curve, which would have led to further price discovery to the detriment of the City’s transaction.

Results & Impact

Despite a volatile market backdrop and a crowded Texas issuance calendar, the City of Round Rock successfully completed its refunding transaction and achieved its financing objectives. The financing demonstrated continued investor confidence in the City’s strong credit fundamentals, diverse economic base, and expanding tax base.

Following the repricing, the underwriting team successfully distributed a majority of the balances during the afternoon session while continuing to work through select maturities. The financing generated approximately $1.15 million in gross debt service savings for the City, which translated to over $870,000 in net present value savings.  The transaction reinforced Round Rock’s position as a well-regarded and highly sought-after Texas municipal issuer.