Porter White & Company served as municipal advisor to the City of Birmingham on the City’s Tuesday, October 20 refunding of $179 million of general obligation debt, a substantial portion of the City’s outstanding debt to achieve significant interest savings. Goodloe White, President and Michael Stone, Vice President represented Porter White & Company on the assignment. Matthew Arrington, President of Terminus Municipal Advisors, LLC, served as co-municipal advisor.
Weighted average all-in true interest cost of the 11-year average life refunding debt was 2.25%, the lowest interest cost for the City’s equivalent maturity general obligation debt in many decades. Present value savings from the refunding totaled approximately $44 million of which $25 million will favorably impact the City’s hard pressed general fund, reducing payments for debt service from the general fund by approximately $5 million in the current and next four fiscal years.
White commented, “As a firm we believe that successful financings are the result of being prepared for good luck. We were fortunate to be associated with an outstanding financing team that prepared a complex financing for market with skill and speed. And we were fortunate that the market cooperated and stayed strong while the financing was prepared, backing off only modestly from historic interest rate lows in August, 2020.
“We were glad to work with co-municipal advisor Matthew Arrington who brought outstanding technical skill and sound judgement to the team. The senior managing underwriter, Stifel, and co-senior manager, Raymond James, priced the financing aggressively and achieved for the City all the market had to offer. Gary Rehm of Stifel took the lead in structuring and restructuring the financing in the midst of changing conditions in the bond markets to achieve the maximum benefit to the City in terms of near term reduced debt service paid from the general fund. Mike Dunn provided transaction oversight, and Jason Barnett led the sales and underwriting process for Stifel. Matt Adams and Brad Green handled the transaction for Raymond James. Heyward Hosch and Ann Todd of Maynard, Cooper & Gale, P.C. served as bond counsel and prepared legal and offering documents and addressed important legal questions with dispatch. Rod Kanter of Bradley Arant Boult Cummings LLP served as underwriters’ counsel.
“The lion’s share of the credit for the successful financing goes, however, to the City, to the Mayor and the City Council, and to the Department of Finance and the Office of the City Attorney. Mayor Randall L. Woodfin and Finance Director Lester D. Smith, Jr. set the goals for the financing and assembled the financing team. More importantly they worked for months, even before the outside members of the financing team started up, to position the City to retain a strong financial position in the face of dramatic revenue shortfalls caused by the Covid-19 pandemic. While rating downgrades by the major rating agencies have been the rule rather than the exception for municipalities this year, the four rating agencies that rate the City’s debt all maintained their ratings unchanged. This result is attributable to the actions taken by the Mayor and City Council, including adopting a budget for Fiscal 2021 that addressed the adverse effects of the pandemic in a way that convinced the rating agencies that the City was dealing with the financial impact of the COVID-19 pandemic.”