Source: Equitable Facilities Fund

Despite the charter school tax-exempt bond sector’s record volume for each year between 2012 and 2017, last year’s financing activity ended with a material decrease of 17.1%, at $3 billion, compared to 2017’s volume of just over $3.5 billion.  For most market participants, this bond issuance trajectory reversal was expected due to the acceleration of deals that came to market in late 2017. The substantial 2017 increase in volume was primarily due to a reaction to congressional debate over tax reform that began in earnest in November and was driven by the fear of the loss of authority for private activity bonds (which ultimately did not occur) as well as advance refundings (which took effect on January 1, 2018). The extent of this sector’s 2018 decline, however, was not quite as pronounced as the overall tax-exempt market reduction of 21.6%—a nod to the continued high demand for affordable fixed-rate long-term charter school facility financing. Specifically, charter schools were responsible for 129 distinct transactions in calendar year 2018, totaling just shy of $3 billion of tax-exempt bond issuance. The range in par amount was extraordinarily wide this year—spanning from less than $2 million to over $350 million.