School Building Assistance: Funding for the 21st Century

1
School Building Assistance Funding for the 21st
Century
Debt Marketing Perspective
August 23, 2004
2
City and Town Bond Anticipation Notes
3
City and Town Bond Anticipation Notes

• Substantial borrowing by cities, towns and
  regional school districts for the Commonwealths
  portion of construction costs
• Approximately 245 communities currently
  participate in the SBA program
• Of those 245 communities, a large number have
  already issued BANs, and in some cases long term
  bonds, in anticipation of Commonwealth aid
• Estimated BAN Principal ( in millions)

4
Offering a New Credit
5
Other Major Sales Tax Issuers

• Other major sales tax credits include
• California Economic Recovery Bonds
• Massachusetts Bay Transportation Authority
• New York Local Government Assistance Corporation

6
Investor Exposure to Commonwealth GOs

• Outstanding Commonwealth General Obligation bond
  principal has increased by 3.4 billion since
  2000

• Commonwealth of MA GO Bond Principal ( in
  millions)

Commonwealth of MA GO Spreads to MMD 2000 vs.
2004
7
Offering a New Credit

• Relative size of debt issuers within the
  Commonwealth
• Massachusetts Issuers Debt Outstanding

8
Offering a New Credit

• School Building Authority Sales Tax Bonds will
  differ from the Commonwealths GO debt by both
  credit and term
• Investors will view the Sales Tax Bonds as a
  separate credit from the GO
• The term will provide substantial volume in
  maturities which do not overlap with GO debt

Annual Principal Amortization ( in millions)
9
Pricing Experience With Similar Credits

• When the MBTA Senior Sales Tax Bonds were priced
  in 2000, the average spread 1 basis point through
  MMD, versus an average of 6 to 12 basis points
  off MMD for Commonwealth GO Bonds priced at a
  similar time

10
Pricing Experience With Similar Credits
11
Pricing Experience With Similar Credits