N.Y. HFA, Mortgage Agency Pick New Underwriters

The New York State Housing Finance Agency and State of New York Mortgage Agency selected a new slate of underwriters yesterday at their monthly board meetings. The agencies selected 12 firms to serve as senior managers and 10 firms to a co-manager panel from a pool of 36 firms that responded to a request for proposals issued in January.

The new slate is smaller than the previous slate of 24 underwriters and could shrink further in the future.

“We have seen national firms leave the municipal business or curtail staffing of their housing groups and regional and minority firms step up their commitment to the industry,” HFA executive vice president Marian Zucker said in board materials. “If we find that we issue bonds less frequently during the next two years, we will curtail the panel size as appropriate in our next RFP process.”

The HFA and SONYMA operate jointly with several other state agencies, including the Municipal Bond Bank Agency and the Tobacco Settlement Financing Corp., and the underwriters selection applies to them as well.

The RFP was issued under new guidelines approved in December based on the recommendations of a task force created last summer by New York Gov. David Paterson to increase the participation of minority- and women-owned firms in underwriting state-backed debt. Under the new guidelines, underwriters serve for a two-year term, a change for HFA and SONYMA, which had last approved its underwriters more than 10 years ago to serve indefinitely.

The new slate reflects the changed nature of the public finance business, which has seen firms merge, collapse, or leave the business.

Most of the firms chosen as senior managers had been approved as senior managers before, including the newly merged Banc of America Securities/Merrill Lynch, Citi, George K. Baum & Co. Goldman, Sachs & Co., JPMorgan, Morgan Stanley, Raymond James & Associates Inc., and Samuel A. Ramirez & Co. Two firms moved up from the co-manager pool — minority-owned firm Siebert, Brandford & Shank LLC, and RBC Capital Markets Corp.

Also approved to the senior manager pool were the successor firms of two previously approved seniors managers — Jefferies & Co., which took over Depfa First Albany, and Barclays Capital, which last fall acquired investment banking operations from the ashes of Lehman Brothers.

Other notable changes included the dropping of M.R. Beal & Co. and Bank of New York Mellon from senior manager status to co-manager status; the addition of Lebenthal & Co. to the co-manager pool; and the dropping entirely of Sterne Agee & Leach Inc., which had been a co-manager.

The HFA provides financing for affordable housing deals and sells personal income tax bonds on behalf of the state. The agency has sold $8.9 billion of bonds since 2000, including $169.8 million in the current year, according to Thomson Reuters.

SONYMA sells bonds to provide mortgages to low- and moderate-income first time homeowners and will be issuing bonds under the newly approved $350 million state student loan program. The authority has sold $3.79 billion during the same time period.

Last month the New York State Environmental Facilities Corp. and the Dormitory Authority of the State of New York choose new underwriting slates under the new guidelines. The New York State Thruway Authority and the Empire State Development Corp. later this year plan to issue RFPs for underwriters.

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