City of Pearland
Three-part financing supports infrastructure and capital improvements across Pearland
Background
Located within Brazoria, Fort Bend and Harris Counties, the City of Pearland issued three concurrent financings totaling approximately $82.1 million: $19.995 million of Permanent Improvement Bonds, Series 2026; $3.635 million of Certificates of Obligation, Series 2026A; and $58.465 million of Certificates of Obligation, Series 2026B.
Baird served as senior managing underwriter for all three series, which received ratings of AA from S&P Global Ratings and AA+ from Fitch Ratings. The financings supported a range of projects throughout the City. The Permanent Improvement Bonds funded drainage, street and bridge, and parks and recreation projects. The Series 2026A Certificates funded improvements to the Clear Creek Trail extending from the Barry Rose Water Reclamation Facility to the University of Houston Clear Lake, along with street and road improvements, traffic signals and the Barry Road Masonry Wall. The Series 2026B Certificates funded improvements and expansion to the Barry Rose Water Reclamation Facility and other water and sewer system improvements.
Opportunity & Implementation
Investor sentiment heading into pricing was mixed. A brief market rally, driven by news of increased treasury buyback activity, had faded. Texas municipal issuance in August was also on pace to reach its highest level in more than five years, with two comparable sales expected to come to market that did not feature split ratings. To differentiate Pearland’s offerings and broaden investor appeal, Baird evaluated multiple coupon and maturity structures. The bonds and certificates were ultimately offered with 5.00% coupons on maturities through 2044 and a combination of discount, 5.00%, and 5.25% coupons on longer maturities, helping attract investors across a range of preferences.
Results & Impact
Baird generated strong investor interest, receiving orders from 36 unique institutional and retail investors, including mutual funds, separately managed accounts, insurance companies, and other professional money managers. Demand was strongest for the larger 2026B Certificates, with subscription exceeding five times available par on the 4.75% 2056 maturity. This demand allowed for yield reductions on select 2026B maturities during repricing. Investor participation was more limited for the smaller 2026A Certificates and Public Improvement Bonds - particularly for those maturing prior to 2035. Following modest pricing adjustments, Baird underwrote approximately $7.6 million of remaining balances to facilitate the transaction. The financing achieved competitive pricing levels to comparable offerings and provided the City with efficient access to capital to support its capital improvement program.
