Transaction Details

Hermosa Beach City School District

Municipal

Lead Bookrunner

Baird’s California K-12 Public Finance group served as sole managing underwriter on $7,998,559 Election of 2024 General Obligation Bonds, Series A (Bank Qualified) (the “Bonds”) for Hermosa Beach City School District (the “District”) comprised of both current interest bonds (“CIBS”) and capital appreciation bonds (“CABS”). The District was established in 1904 and encompasses 1.3 square miles in the South Bay region of the County. The District’s boundaries are coterminous with the limits of the City of Hermosa Beach. The District currently operates as one school on three sites - Hermosa Beach Preschool at View (three to four-year-olds), Hermosa View (grades TK-1), Hermosa Vista (grades 2-4), and Hermosa Valley (grades 5-8). The District’s pupil/teacher ratio for fiscal year 2024-25 was approximately 20:1 for grade level TK; 24:1 for grade levels K through 3; 32:1 for grade levels 4 through 5; and 32:1 for grade levels 6 through 8. The District’s projected ADA for fiscal year 2025-26 as set forth in the District’s 2025-26 Adopted Budget is 1,407 students. Pursuant to the 2024 Authorization, the District is authorized to issue $28,700,000 of general obligation bonds. Upon the issuance of the Series A Bonds, $20,701,440.10 of the general obligation bonds of the 2024 Authorization will remain unissued.

The market tone was constructive but selective. Premium structures inside 2040 saw cleaner placement, while discount terms required price discovery in supply-heavy sectors such as Texas independent school districts. Fund inflows and crossover interest remain supportive; that said, buyers are disciplined, favoring visible concessions and liquid points on a still-steep curve.

The Bonds were rated “AA” by Standard and Poor’s Rating Agency primarily structured with CABS along with one maturity CIB series. A month prior, California school issuance was extra high, but it had significantly tapered off to start August. CAB issuance in California is even more scarce. The two combined set us up nicely for the order period on August 6th, even for a smaller size issue. We had 9 different accounts come in for the transaction, with as much as six times oversubscribed on the longer end where maturity values were over one million dollars. By completing the bond sale on this day, the Bonds were able to secure lower interest rates than other similarly rated California K-12 transactions that were priced in the days preceding and following the sale that utilized CABS.