REFINANCING OPPORTUNITY June 24, 2019 Scott Shearer & Ken Phillips Ben Kapenstein
East Penn School District Topics of Discussion June 24, 2019 1) Refinancing Opportunity The District’s financing team consisting of PFM Financial Advisors and RBC Capital markets has identified a refinancing opportunity on the Series A of 2012 & Series of 2014 Bonds. The goal of the refinancing will be to realize interest rate savings. Current projections show savings of approximately $155,000. Statistics on Issues Being Considered for Refinancing Series A Series of 2012 of 2014 Outstanding Par Outstanding Par $6,770,000 $6,540,000 Interest Rates Interest Rates 2.00% - 2.75% 2.00% - 3.25% Call Date Call Date 11/15/17 5/15/2019 2) Bank Qualified (“BQ”) vs. Non - Bank Qualified (“Non - BQ”) a. Holders of BQ bonds enjoy certain additional tax benefits, possibly resulting in higher demand. b. BQ bonds typically have lower interest rates and a shorter call feature than non-BQ bonds. c. Depending on market forces, it may make sense to refunding all or only a portion of the Series A of 2012 and Series of 2014. i. The Financing Team recommends that the District keep the refinancing flexible enough to price the bonds in the way that will most benefit the District. 1
MUNICIPAL MARKET UPDATE June 17, 2019 HISTORICAL MMD CURVE ILLUSTRATION ‐ SINCE JANUARY 1, 1998 7.00 6.00 5.00 Yield (%) 4.00 3.00 2.00 1.00 Range Average Current 0.00 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Year 11 Year 12 Year 13 Year 14 Year 15 Year 16 Year 17 Year 18 Year 19 Year 20 Year 21 Year 22 Year 23 Year 24 Year 25 Year 26 Year 27 Year 28 Year 29 Year 30 Year Maturity Year SPOT ANALYSIS ‐ 10 YEAR MMD ‐ SINCE JANUARY 1, 1998 Since 1/1/1998 Amount Date 5.10 Min 1.290 6/27/2016 Max 5.370 5/18/2000 4.60 Average 3.208 n/a Current 1.660 6/17/2019 4.10 3.60 Yield (%) 3.10 2.60 2.10 1.60 1.10 SPOT ANALYSIS ‐ 10 YEAR MMD ‐ SINCE JANUARY 1, 2018 2.900 2.700 2.500 2.300 Yield (%) 2.100 Since 1/1/2018 Amount Date 1.900 Min 1.610 6/7/2019 Max 2.770 11/2/2018 1.700 Average 2.310 n/a Current 1.660 6/17/2019 1.500 Jan‐18 Feb‐18 Mar‐18 Apr‐18 May‐18 Jun‐18 Jul‐18 Aug‐18 Sep‐18 Oct‐18 Nov‐18 Dec‐18 Jan‐19 Feb‐19 Mar‐19 Apr‐19 May‐19 Jun‐19 PFM Financial Advisors LLC 6/17/2019 2
EAST PENN SCHOOL DISTRICT SUMMARY OF OUTSTANDING INDEBTEDNESS A B DEBT SERVICE REQUIREMENTS 1 2 3 4 5 6 7 8 9 Fiscal G.O. Bonds G.O. Bonds G.O. Bonds G.O. Bonds G.O. Bonds G.O. Notes G.O. Bonds Total Year Series of Series A of Series of Series of Series B of Series of Series of Debt Ended 2012 2012 2013 2014 2015 2016 2018 Service 6/30/2019 946,426 847,470 424,200 713,841 200,100 2,606,010 4,420,296 10,158,343 6/30/2020 1,529,976 749,620 712,941 717,250 2,595,627 3,818,494 10,123,909 6/30/2021 1,532,176 752,470 726,691 733,850 1,437,925 4,961,744 10,144,856 6/30/2022 1,528,826 750,070 739,941 739,950 4,975,163 8,733,950 6/30/2023 1,533,961 752,420 742,407 740,700 4,979,494 8,748,981 6/30/2024 1,526,260 753,651 757,971 681,750 2,045,203 5,764,836 6/30/2025 774,563 763,293 756,985 2,294,840 6/30/2026 766,990 764,481 1,531,471 6/30/2027 779,553 764,488 1,544,040 6/30/2028 785,801 771,969 1,557,770 6/30/2029 780,588 782,513 1,563,100 6/30/2030 TOTALS 9,372,188 8,481,925 424,200 8,234,228 3,813,600 6,639,562 25,200,393 62,166,096 LOCAL EFFORT REQUIREMENTS 10 11 12 13 14 15 16 17 18 Fiscal G.O. Bonds G.O. Bonds G.O. Bonds G.O. Bonds G.O. Bonds G.O. Notes G.O. Bonds Total Year Series of Series A of Series of Series of Series B of Series of Series of Local Ended 2012 2012 2013 2014 2015 2016 2018 Effort 6/30/2019 827,789 748,825 379,065 703,447 200,100 2,323,868 3,906,318 9,089,414 6/30/2020 1,338,190 662,365 702,561 717,250 2,314,610 3,374,491 9,109,467 6/30/2021 1,340,114 664,883 716,110 733,850 1,282,247 4,384,808 9,122,012 6/30/2022 1,337,184 662,763 729,167 739,950 4,396,666 7,865,730 6/30/2023 1,341,675 664,839 731,597 740,700 4,400,494 7,879,305 6/30/2024 1,334,939 665,927 746,935 681,750 1,807,393 5,236,945 6/30/2025 677,469 674,446 745,963 2,097,878 6/30/2026 677,713 753,350 1,431,063 6/30/2027 688,813 753,356 1,442,170 6/30/2028 694,335 760,729 1,455,064 6/30/2029 689,728 771,119 1,460,847 6/30/2030 TOTALS 8,197,360 7,494,638 379,065 8,114,335 3,813,600 5,920,725 22,270,171 56,189,894 Principal**: 7,930,000 6,770,000 0 6,540,000 3,440,000 3,986,000 22,920,000 51,586,000 PE%: 29.96% 27.82% 25.43% 3.48% 0.00% 25.88% 27.79% PE% Status: Permanent Permanent Permanent Permanent Estimate Permanent Permanent AR% (18-19): 41.84% 41.84% 41.84% 41.84% 41.84% 41.84% 41.84% Call Date: 3/15/2017 11/15/2017 Non-Callable 5/15/2019 4/1/2020 Make Whole Non-Callable CurRef - Cur Ref 1998, CurRef - CurRef - 2007 Adv Ref - Cur Ref 2004AA & Cur Ref 2011 2003A, Purpose: 2006A & 2008 2009 2010A 2007 2004A, 2007 ** Outstanding as of June 17, 2019 PFM Financial Advisors LLC 6/17/2019 3
East Penn School District Preliminary Refinancing Schedule Series of 2019 - Refunds the Series A of 2012 & Series of 2014 June 2019 July 2019 S M T W T F S S M T W T F S 1 1 2 3 4 5 6 2 3 4 5 6 7 8 7 8 9 10 11 12 13 9 10 11 12 13 14 15 14 15 16 17 18 19 20 16 17 18 19 20 21 22 21 22 23 24 25 26 27 23/30 24 25 26 27 28 29 28 29 30 31 August 2019 September 2019 S M T W T F S S M T W T F S 1 2 3 1 2 3 4 5 6 7 4 5 6 7 8 9 10 8 9 10 11 12 13 14 11 12 13 14 15 16 17 15 16 17 18 19 20 21 18 19 20 21 22 23 24 22 23 24 25 26 27 28 25 26 27 28 29 30 31 29 30 Preliminary Refinancing Schedule Date Objective Monday, June 24, 2019 * Regularly Scheduled Board Meeting * - Presentation on Refinancing Opportunity - Authorize Financing Team to Proceed Monday, July 08, 2019 * Regularly Scheduled Board Meeting * -Board considers Maximum Parameters Resolution July 2019 - POS / Credit Rating Preparation - Due Diligence Call with Financing Team / District - Credit Rating Interview Late July/Early August -Bond Sale - Series of 2019 September 2019 -Estimated Settlement Date PFM Financial Advisors LLC 6/17/2019 4
EAST PENN SCHOOL DISTRICT SERIES OF 2012A Bonds to be Refunded Optional Redemption: November 15, 2017 1 2 3 4 5 6 7 8 Semi-Annual Fiscal Year State Local Date Principal Rate Interest Debt Service Debt Service Aid Effort 11/15/2019 600,000 2.000 77,810.00 677,810.00 5/15/2020 71,810.00 71,810.00 749,620.00 87,254.93 662,365.07 11/15/2020 615,000 2.000 71,810.00 686,810.00 5/15/2021 65,660.00 65,660.00 752,470.00 87,586.67 664,883.33 11/15/2021 625,000 2.000 65,660.00 690,660.00 5/15/2022 59,410.00 59,410.00 750,070.00 87,307.31 662,762.69 11/15/2022 640,000 2.000 59,410.00 699,410.00 5/15/2023 53,010.00 53,010.00 752,420.00 87,580.85 664,839.15 11/15/2023 655,000 2.250 53,010.00 708,010.00 5/15/2024 45,641.25 45,641.25 753,651.25 87,724.16 665,927.09 11/15/2024 680,000 2.350 45,641.25 725,641.25 5/15/2025 37,651.25 37,651.25 763,292.50 88,846.39 674,446.11 11/15/2025 700,000 2.375 37,651.25 737,651.25 5/15/2026 29,338.75 29,338.75 766,990.00 89,276.78 677,713.22 11/15/2026 730,000 2.500 29,338.75 759,338.75 5/15/2027 20,213.75 20,213.75 779,552.50 90,739.04 688,813.46 11/15/2027 755,000 2.550 20,213.75 775,213.75 5/15/2028 10,587.50 10,587.50 785,801.25 91,466.39 694,334.86 11/15/2028 770,000 2.750 10,587.50 780,587.50 5/15/2029 780,587.50 90,859.51 689,727.99 TOTALS 6,770,000 864,455.00 7,634,455.00 7,634,455.00 888,642.01 6,745,812.99 PE% 27.82% (Temporary) AR% 41.84% (2018-2019) Net 11.64% Effective Reimbursement PFM Financial Advisors LLC 6/24/2019 5
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