Texas Children’s Series 2021A, 2021B, 2021C, and 2021D Bonds

30 Jun

Case studies

Texas Children’s Series 2021A, 2021B, 2021C, and 2021D Bonds

Pricing Date: June 30, 2021

$264,000,000 Series 2021A Tax-Exempt Fixed Rate Bonds

$71,000,000 Series 2021B Put Bonds

$100,000,000 Series 2021C VRDB with SBPA

$90,000,000 Series 2021D Bank DP


Texas Children’s (“TCH”) opted to finance $300 million of its hospital expansion in Austin with the 2021 plan of finance. Given the work being performed for a public deal, TCH elected to also take advantage of synergies by restructuring three series of existing bank debt and implementing a new, more flexible MTI.


  1. Tax-exempt rates began significantly outperforming taxable in early 2021, partially offset by market softness starting in mid-June and lack of preferential trading for in-state Texas bonds
  2. Relatively steep MMD curve challenged thinking on long-term new money structure
  3. Coupon demand has fluctuated in recent weeks, prompting the need to create a pricing structure that was flexible to last minute changes


  1. Fixed Rate Pricing: Ponder worked with management and the banking team to advocate for low coupon bonds to reduce the overall TIC of the issue, including 3% coupon bonds and unique 2.375% coupon par bonds
  2. Put Bonds: TCH opted to incorporate 10yr put bonds into the plan of finance to take advantage of the steepening yield curve while maximizing asset life and final maturity of the new money debt
  3. Bank Debt Restructuring: To capitalize on the financing, TCH refinanced $287mm LIBOR-based bank DPs into
    1. Long term fixed rate debt to take advantage of low rates and eliminate variable, product, and bank risks;
    2. Bank SBPA given the desire for a public product and the recent pricing gap between LOC and SBPA; and
    3. SIFMA based DP to reduce cost and remove future LIBOR discontinuation risk
  4. Overall, TCH secured a cost of capital of 2.70% (all-in TIC) on the fixed rate bonds, 1.29% for 10yr put bonds, and VRDB’s with an SBPA with an expected cost below SIFMA + 25bps

About Texas Children’s: ‘Aa2 / AA / AA’ (Moody’s / S&P / Fitch)

TCH is the sole corporate member of Texas Children’s Hospital and Texas Children’s Hospital Foundation. TCH operates an integrated pediatric and women’s healthcare system located in the Texas Medical Center (“TMC”) in Houston and the surrounding areas. In 2018, TCH began expanding its services into Austin, Texas.

Pricing Results:

Texas Children's Comparable Tax-Exempt and Put Bond Issues

Comparable Bond Sales:

Texas Children's Series 2021A and B Put Bonds Pricing Results