Transaction Details

Rich Township High School 227

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Baird served as senior managing underwriter on the District’s $47,440,000 General Obligation Limited Tax School Bonds, Series 2020B, and placement agent on the $27,135,000 General Obligation Limited Tax School Bonds, Series 2020D and $3,660,000 General Obligation School Bonds (Alternate Revenue Source), Series 2020E. The need for the projects arose from an earlier decision by the school board to close Rich East High School and focus their efforts on improving the remaining school buildings to provide a better environment for educating their students.

Baird helped the District create a plan of finance that funded $105 million in projects. During one of the most volatile periods historically, as the novel coronavirus pandemic escalated within the United States, Baird explored both the public and private placement markets to ensure the District attained the funding it needed at market interest rates. At pricing, Baird utilized both methods of sale, navigating the rapid swings that occurred in the markets at a time when issuance was nearly halted and many investors sidelined themselves. Each comparable bond issue sold in the week prior to this offering required drastic increases to yields. To complicate matters, many financings were added to the day-to-day forward calendar, placing an artificial influx of supply as issuers took a wait-and-see approach, ready to capitalize on the market when it appeared to settle. These conditions, combined with a recent bond rating downgrade of the State of Illinois which placed a general market resistance to purchase Illinois credits, created strong headwinds to sell approximately $80 million worth of bonds.

Going into the pricing understanding these challenges, Baird began pre-marketing the bonds one week prior to the scheduled order period. In addition to receiving feedback from our salesforce, the banking team proactively requested indications of interest from national banks who routinely participate in the private placement of municipal bonds similar to the District’s offering.

After a largely successful order period, Baird was able to sell the early and later maturities with some maturities 1-2x oversubscribed. Similar to many pricings that week, the 2027 through 2034 maturities lacked investor interest. An additional $3.6 million of the 2020E Bonds, which were offered contemporaneously by another underwriter, also remained unsold. Baird was able to place all of the unsold balances (including the 2020E Bonds) via private placement with a fully executed term sheet just four days after the public sale was completed.

As a result, the District was able to receive its funding through the combination of a traditional negotiated underwriting and private placement via two tranches of Limited Bonds without requiring any increases to yields.