Geisinger 2017 A1 – A2

Melio & Company advised Geisinger on the issuance of $587 million of Series 2017 A-1 and A-2 Tax-Exempt Fixed Rate Bonds

Memorial Geisinger

On April 18, 2017, Melio & Company advised Geisinger on the pricing of $350,370,000 Series 2017A-1 and $236,540,000 Series 2017A-2 Bonds, totaling $586,910,000 in par across the aggregate fixed rate tax-exempt, healthcare revenue bond transaction.

Melio & Company’s relationship with Geisinger dates back to our inception. After a competitive process run by Melio & Company amongst five firms, J.P. Morgan was chosen to lead the A-1 Series, while Bank of America Merrill Lynch was chosen to lead the A-2 Series.

Melio & Company served a key role in the preparation of the plan of finance, helped drive the syndicate and the selling group, and oversaw the pricing of the transaction. Geisinger was able to generate $17.6 million in PV savings from the refundings of fixed rate debt, restructure $100 million of VRDBs and a $35 million bank loan into a fixed rate mode, and secure $285 million for new projects.

The pricing schedule originally contemplated a full-day retail order period on Tuesday, April 18th followed by institutional pricing on Wednesday, April 19th, with the option to accelerate the institutional pricing to the 18th if the market conditions were favorable. By noon on April 18th, given a groundswell of $300 million of retail orders and a rallying treasury market, Geisinger chose to accelerate the institutional order period to the same afternoon. During the retail order period, $124 million or 21% of the transaction was fully subscribed, creating scarcity of bonds for institutional investors, who purchased the remaining $463 million or 79% of the transaction. More than 90% of the retail orders were from professional retail, while the remaining approximately 10% were from individuals.

Melio & Company’s syndicate and selling group pre-pricing and pricing strategies allowed Geisinger to explore diverse structuring ideas, evaluate multiple views of the market, and ultimately expand the investor base during pricing. For example, one of the selling group members brought in more orders than any individual co-manager. Melio & Company’s strategy increased transparency and contributed to an attractive final pricing result.

Summary of Series 2017A-1 Pricing
2/15/2042: 3.75% coupon @ +103 bps (3.89% YTM)
2/15/2045: 5.00% coupon @ +55 bps (3.44% YTW, 4.21% YTM)
2/15/2047: 4.00% coupon @ +101 bps (3.92% YTW, 3.96% YTM)

Summary of Series 2017A-2 Pricing (final maturities)
2/15/2039: 4.00% Coupon @ +98 bps (3.80% YTW, 3.89% YTM)
2/15/2039: 5.00% Coupon @ +55bps (3.37% YTW, 4.06% YTM)