|
STIFEL
<br />G. 1il rl lI:I l I(• rig, III ^,I: 1(4 P/P.,(1,1 I;(q; f^ art I'llr yr+, llfri r rl Ib it 11I ISiu'l(I"I
<br />Specific Structuring Ideas
<br />A. t I ,( "
<br />, ,
<br />It rr'11 1 .. ,r 1 il; 1 r t 11.ty
<br />„.I
<br />11 1
<br />1, t1 ..
<br />.,, an,), f
<br />I ..... t, 9,1 1t, u -t 1 ar n;a
<br />r1, II I l r
<br />t r I
<br />1 11 rnr ,c 1 t'rvl , 1 ,:01 n, v.c/i
<br />n1 , 10
<br />1t
<br />/ door l 1 , 1rt
<br />.>, 11
<br />11
<br />v 1 n tt ✓ ,na ., rI
<br />f „r, Iv
<br />,
<br />t
<br />t ,t, t 1r,
<br />„
<br />r, 11 t ,:r . v , 1 1111.. ., . a
<br />. n
<br />. , ;:t .t
<br />t . t . f 't
<br />Based on market conditions as of March 8, 2021, we present our proposed structure below. A breakout of the Sources
<br />and Uses is provided in Appendix E. Note that our proposed structure will be the same, regardless of the size of the POBs.
<br />Please see below and refer to question 6 for a list of all our assumptions and Structuring recommendations.
<br />A eve,, Pk, I I" Or, 0,,� Pra, )uwJ ',I. I LK lW".
<br />✓ Designed to Maximize Investor Participation: Our structure contemplates serial bonds through 2039 (much longer
<br />than any other recent POB) and two term bonds in 2041 and 2044 (Our recommended final maturity).
<br />✓ No Reserve Fund: The lack of a reserve fund will not impact the marketing or pricing given the expected 'AA' rating.
<br />✓ Standalone S&P Rating: As detailed in the Rating Strategy section, Stifel recommends securing a rating from S&P
<br />alone, as it has the most favorable view of POBs among the three major rating agencies.
<br />✓ Optional Call Flexibility: 10-year optional call to preserve future flexibility to refinance.
<br />Process to Deriving our Proposed Spreads. Five pension financings have come to market since the beginning of the year,
<br />all 'AA' rated by S&P. Because these comparable transactions priced at different times in varying market conditions, it is
<br />important to evaluate not only their performance in the primary market but also their secondary market trades in recent
<br />weel<,. Our analyses of these trends along with the City',,trnng underlying credit lead u, to our proposed spreads, which
<br />are based on market conditions as of March 8, 2021. Our resulting estimated true interest cost is 2.76%.
<br />As previously mentioned, Stifel has more pension financing experience than any other firm; experience that includes some
<br />of the lowest yielding long-term POBs that have ever come to market (Glendora, Chula Vista, and Orange). With our prover)
<br />performance track record, we are confident that we can deliver the most aggressive pricing possible for the City.
<br />suer
<br />City of Santa Ana City of orange
<br />City of Chula Vista
<br />City of Downey City of Monterey Park City of El Cajon
<br />ssua
<br />Pass roes
<br />roan
<br />roes roes Poss
<br />P.,
<br />Too-oa6,4A ;nn0
<br />e,I r. 0,0
<br />11nine, 11'nnn 147.)I0.0n0
<br />e,Il,hi,
<br />10-yr,r P,r CAI 9/1/2030 L,� ion
<br />n/1/201i einn
<br />01il20in en inn G/1/201i C,5) 100 4/1/20300100
<br />S&P
<br />AA(I...... d) AA
<br />AA
<br />AA AA AA
<br />1im9Ee
<br />TGo GAM: Tern) GOndl-
<br />GAM: Gilcr[]IEGTet,n GOnd,_
<br />None None NOnB
<br />Manar.er
<br />IBo Still (Lead)
<br />Still (Sorel
<br />BofA(Lead) Ramlrea(Eeadl BafA(Sole)
<br />.ale state
<br />r41>0)I March 3, 2021
<br />Fabruary 11, 2021
<br />February 9, 2021 FebrVary 2, 2021 January Ia. 2011
<br />AIr
<br />nOm
<br />7 " efff, OJA M
<br />' rasm,6 .iiqE "m =
<br />urr°F , mift orfri, tw l"Cn^p dfiC PogW^Ifi9mr Sot
<br />2022
<br />0.)q0
<br />01nn > yr +CA3 n.,q1 n141 ) yr +O.IG
<br />01 nl 0Ill 7,,, +0.04
<br />n.)13 n.I ....a 7, +0.10 n44q n 14q )y. +0.30
<br />7(121
<br />n.1en
<br />I Irrt ) yr +0.211 n 1dt-0141 7yr +0.2s
<br />n )41 n Ill ),,, +0A I
<br />n 317 n 117 7yr .OJn n Air.; n 1-. 3 7yr +n.2s n CAP n I4q >yr +nsn
<br />204
<br />n ,Rq
<br />u 3J9 1-,, +0.2s n;97 n M7,3-yr +0.10
<br />o 410) n 17q Syr +AJ4
<br />n 1A711 .07 Syr +OAA n A)e n Cie Ayr +O.45 n o)7 (I ))7 Ayr -n.7n
<br />2025
<br />1.017
<br />0.B47 P, +0.20 0.911 U/I P-vr 10.25
<br />0Pet) 0AbU 5vr 10.20
<br />01120.112 Syr t0.30 0.83/U 43/ syi 10.45 1.1/00.1/0 svr 10,70
<br />2026
<br />1.297
<br />O. R47 5-yr +0.45 1.224 u./2- 5-vr 4, O
<br />UB4U UA6U Syr +0.38
<br />U.9R U4/1 svr ♦0.50 1Ob/U43/ svr +O.65 1419042J Syr +0.95
<br />2027
<br />1.680
<br />1.)RO 7-vr +D.40 1S871.117 7-Vr +0.45"
<br />1.164 O1804 7vt +0.36
<br />1 3670.817 7vt +0.55 1 4In 0.780 7Vr +0.65 1 6%0 796 7yr +0.90
<br />2028
<br />11980
<br />1 )AA 7-y +050 1J871117 7-yt +055
<br />1414 0.8(34 7y +0.61
<br />1_5570R17 7yt +035 1 Gin 07Rn 71, +0.85 1 dg6079C 7yr +110
<br />2029
<br />0 141
<br />-_E9'. 10 yr +0.55 ).070 147n 1n yr +0 GO
<br />1 678 " 1,11A 10yr +0A9
<br />1 7rn I 'n 10yr +0.60 17g3 1093 '. 0yr +030 ) f19n n901 nyr +1.00
<br />2030
<br />2.291
<br />1.5u1 1n yr +0.70 2.2201.470 in yr +0.75
<br />1.728 1138.In, +0.59
<br />1.85n I _5010yr +0.70 1,893 109310yr +0.80 2.190 ..09010vr +1.10
<br />2031
<br />2.391
<br />1.591 10-yr +0.80 2.2701470 10-vr +0.80
<br />1.823 11381dyr.. *0.69
<br />19501.'.5010yr +0.80 1993.109310yr +0.90 2.290109010vr +1.20
<br />2032
<br />1491
<br />1.591 10-yr +0.90 21501470 lu-vr *0.98
<br />1938 1.136 10yr '10,80
<br />20501. 15U luvr +0.90 2093109310yr *1.00 2.3901090 lovr *1.30
<br />2011
<br />2. 391
<br />1591 _ui +1.00 2.hPU 14/13 _I)l +1.08
<br />2046 1.13810yr +0.42-.,
<br />2.1GU 1. 15U 1UVr 41.00 2.19J 1 UJ3 lUvr +1A0 14JU 1 09U IUVI +1.40
<br />2034
<br />2 601
<br />1 r91 10vr +110 2 G50141010yr +118
<br />2138 1.138101, +1.00
<br />'2:J. tO 11e(J10i +110 2193 1 (110%, +120 2 6401090 10Vr +1 55
<br />2035
<br />2J9_
<br />1'41 10-yr +120 J 7`,0147010-yr +128
<br />J 29l; 1.13810yr +I16
<br />) ISO "1.. ISO 110yr +1.20 J 14:11 Oqi 1%, +130 ) 740109010yr +165
<br />2036
<br />1. Hq1
<br />_ 59_ I yr +1.30 ).8)n 147n 1n yr +1.3s
<br />),ICA 1. I1810yt +1.26
<br />14g1 I ocn 1nyr +1.40 ) Nn 1 nqn In, +1 70
<br />2033
<br />/.991
<br />-i.5U'. 1n yr +IA0
<br />2.488 1.138 lnyr +1.35
<br />"..
<br />2038
<br />3,041
<br />1.591 10-yr +1.45
<br />2039
<br />3.091
<br />1.591 10-yr +1.50
<br />2040
<br />3.01b 2 IbP su-yr +0.75
<br />2 ti 15 1.915 suyr 40.90
<br />2041
<br />3.1s5
<br />).105 30-yr +0.8s
<br />2. B1/2. 1119S530yt+0.85/OJS
<br />2043
<br />302118113UIr-,,1AS 3.18414343Uyr 1,45
<br />2044
<br />s.255
<br />z sOP s0-yr +0.95 3. 115 2.265 30-yr *0.85
<br />2995 1.015 mu,, +1.05
<br />2045
<br />_ _...
<br />2 91/2.81 1 955 30vr+0.95/0.85
<br />_... _...
<br />Takeaways: Relative to Orange s: T.... r (Lower) Spreads 2022 2
<br />City Council e-�� S(2021
<br />.. Serialization Out Much Longer; txpecte Insurance on lerm Bonds ,
<br />city of Santa Ana I Proposal to Provide Underwriting Services Page 8
<br />
|