Services: Public Finance Advisory Services
Competitive Sales
Environmental Capital has extensive experience in advising municipalities, authorities, districts and other issuers on the competitive sale of tax-exempt bonds. As Financial Advisor we will take following steps (as appropriate):
Preliminary Steps
- Meet with client representatives to determine the client’s goals and objectives for the financing.
- Review all approved projects with outstanding bond authorizations and any proposed capital projects to determine which projects will require cash outlays prior to the next anticipated issuance of debt.
- Meet with the appropriate client officials overseeing the various capital projects to determine the cash flow requirements of the projects and the timing of those needs.
- Discuss with bond counsel projects to be financed to ascertain whether there are any federal tax law issues to be addressed in structuring the transaction.
- Review the client’s recent financial statements for any credit issues.
- Perform a preliminary sizing of the debt issuance and calculate the debt service requirements based upon the preliminary sizing.
- Examine the impact the debt issuance (based on the preliminary sizing) will have on the Client’s operating budget, particularly the need to increase the amounts raised through taxation.
- Review the preliminary sizing and its operating budget impact with the appropriate representatives of the Client. Advise Client representatives of current market conditions and anticipated market changes.
- Revise, if necessary, the debt sizing in response to meeting with Client officials.
- Analyze the impact of the proposed financing on the Client’s debt ratings.
- Develop a schedule for the financing and organize the financing team selected by the Client.
- Review the proposed financing schedule with Client officials and distribute the timetable to all members of the financing team.
- Outline the alternative financing mechanisms for client officials enumerating the benefits and shortfalls of each alternative. Among the alternatives: notes, fixed rate bonds, variable rate obligations, competitive bid, negotiated sale, designated and qualified securities, etc.
- Recommend a financing structure that meets the Client’s needs while taking advantage of market preferences.
Pre-Sale Marketing Activities
- Initiate pre-sale marketing of the debt offering, including letters to the Client’s depository banks and other investment partners.
- Advise the Client regarding the use of book entry securities. Coordinate activities with the securities depository.
- Develop a financial presentation for the rating agencies that highlights the Client’s creditworthiness. Invite the rating agencies for an on-site visit to the Client and arrange the same, if appropriate.
- Meet with Client representatives and bond counsel to ascertain the information needed to draft the Preliminary Official Statement. Advise the Client of their obligation under secondary market disclosure requirements of SEC Rule 15c2-12.
- Prepare the draft Preliminary Official Statement and distribute to the appropriate members of the financing team to review and comment.
- Revise the draft Preliminary Official Statement incorporating comments of the financing team and distribute the second draft.
- Sulicit price quotes from needed service providers and advise the Client regarding the selection process. Review the Client’s procurement pulicy to assure compliance.
- Prepare application for bond insurance, if appropriate, and coordinate the application process.
- Prepare required debt statement and assure the same is filed with the Office of the State Comptruller (bonds only).
- Oversee the printing and distribution of the Preliminary Official Statement, Notice of Sale and Bid Form to the appropriate underwriters and certain institutional buyers.
- Arrange for the publication of the Notice of Sale in the Client’s official newspapers and/or the Bond Buyer. Also, list the proposed sale in The Bond Buyer.
Day of Sale
- Attend the bid opening.
- Verify the mathematical calculations in the submitted bids.
- Determine the lowest bid in conformance with State law and recommend acceptance or rejection of the bid to the client.
- Advise the winning bidder of the client’s acceptance.
- In the case of level debt service structure, review the principal schedule to assure compliance with the law. Advise the underwriter of any revisions to the amortization schedule.
Closing/Post-Closing Actions
- Assure the securities are delivered to the securities depository on a timely basis.
- Arrange for the proper transfer of funds at closing. Discuss with the client plans for the investment of proceeds.
- Review all closing documents and apprise the client of requirements they have under the legal documents.
- Arrange for the printing and delivery of the final Official Statement.
- Meet with the client to review the requirements of tracking the proceeds for arbitrage purposes.
- Prepare the final amortization schedule for the bonds on a project by project basis.
- Set up a mechanism for the issuer to comply with secondary market disclosure requirements
- Assist in closing the issue.
Negotiated Sales
The negotiated sale of municipal bonds is appropriate when it will result in lower overall costs for the bond issuers, including both the initial costs of issuance of the bonds and the interest costs of the bonds over time. This may occur when the issuer is new to the bond market, has a complicated or weak credit, has a “story” to tell the market or when the markets themselves are unsteady.
In a negotiated sale the bond underwriter is usually selected early on in the process of developing the bond issue. The underwriter then provides assistance in structuring the bond issue; in approaching the rating agencies, bond insurors and other political credit enhancements; in pre marketing and marketing the bonds and in underwriting the bond issue. The underwriter’s compensation and the interest rates for the bonds are negotiated at or before sale.
Environmental Capital advises its clients as to whether a negotiated sale is appropriate and assists in developing the process for the selection of underwriters and in negotiating the underwriters compensation and the interest rates.
Negotiated Official Statements