Transaction Details

Petaluma City Schools

Municipal

Lead Bookrunner

Baird’s California K-12 Public Finance group served as sole managing underwriter on $76,000,000 General Obligation Bonds, 2024 Election, Series 2025A (the “Bonds”) for Petaluma City Schools (the “District”) in two separate series ($52,800,000 for the High School District and $23,200,000 for the Elementary School District). The Petaluma Elementary School District (the “Elementary School District”) is located in southern Sonoma County (the “County”) in the State of California (the "State"), approximately 40 miles north of the City of San Francisco. The District has an estimated population of about 31,000 residents, which includes the City of Petaluma (the “City”). Together with the Petaluma Joint Union High School District (the “High School District”), the District operates under a common administration known as “Petaluma City Schools,” which provides education for students in transitional kindergarten through 12th grade. Petaluma City Schools has a projected combined enrollment in fiscal year 2024-25 of 7,219 students, with 2,258 students attending the District and 4,961 students attending the High School District. The High School District has eleven feeder elementary school districts, including the District. The proceeds of the bonds are being used to finance projects approved at the November 5, 2024 election.

During the week of pricing (May 19th), the municipal market faced a deluge of supply ahead of the upcoming holiday weekend, with both negotiated and competitive calendars running heavy. Despite the volume, absorption across the curve was steady, though the long end showed modest signs of softness.

Negotiated deals were met with mixed reception. While some issuers leaned into market momentum with concessions and re-pricings, others misread the tone and faced slower order books—particularly on longer-dated maturities. Deals with strong credit or upgraded outlooks fared better, while lower-tiered credits underperformed when priced without accommodation. The competitive market was notably aggressive, especially in the short to intermediate range, though balances began to build in longer bonds that weren't presold.

Secondary activity was dominated by a focus on primary pricing. The MMD curve held steady through 2042 but was cut 1bp in 2043 and 2bps from 2044 onward, reflecting light weakness in the long end. Relative value slipped slightly, with ratios hovering around 72–73% for the 10-year spot and nearing 90% for the 30-year—suggesting tax-exempts still appear rich against Treasuries despite the recent fade in yields.

The District was able to capitalize by entering the market early in the week ahead of the large supply. Baird placed the Bonds with 74 separate orders in aggregate for both series of bonds to complete the transaction. By completing the bond sale on this day, the Bonds were able to secure lower interest rates than other similarly rated transactions that priced in the days following the sale.