As far as the top municipal bond underwriting firms go, DBC has made it 30 for 30.
DBC Software, which is now used for structuring roughly 90% of the annual negotiated municipal bond underwriting in the U.S., said it recently filled out a client list that includes the top-30 largest underwriters by volume in the marketplace, as ranked by The Bond Buyer 2012 Annual Review. DBC is a business division of SS&C Technologies, Inc., which is a Windsor, Conn.-based vendor in the financial markets.
The vendor signed PNC Bank, the last of the group, to use DBC Finance. Doing so marked a high point in a long process, said Richard Shalowitz, senior vice president at SS&C Technologies.
"It's taken a long time," Shalowitz said. "We now have the 30th of the top 30. But the fact is that we may have had 29 of the top 30 for the past five or six years."
For the bank, a growing muni business necessitated the move, said Robert Dailey, managing director and head of the public finance business at PNC Capital Markets LLC.
"With the expansion of PNC's public finance business, it was important that we adopt the industry standard as part of enhancing our debt structuring and modeling platform," he said.
DBC can be characterized as an optimization engine that helps underwriters figure out the best structure for a negotiated or competitive issue. Users enter a set of constraints and a goal, which most often entails the lowest borrowing cost.
And with those, the software will structure the bonds, providing the best possible structuring of serials, terms and amortization under the constraints defined, rather than all possible structures.
The software works for new-money issues, as well as refinancings, Shalowitz said. With refundings, DBC helps calculate how exactly the re-fi will work and what the savings are. It does this while taking into account the complexity of the Internal Revenue Service regulations that are specific to the municipal finance tax-exempt community, Shalowitz said.
One client who would not give his name or that of the firm said the bank has been running DBC Finance almost since the software's inception, ranking it among the vendor's first users. The bank said it directs nearly every municipal transaction it does through the software.
"We may do some analytics ourselves, but ultimately, we plug it through DBC," the client said. "And every junior banker that comes to our public finance group is trained in DBC Finance."
The bank likes how DBC Finance has a robust warning engine that anticipates mistakes that junior staffers might make. What's more, the client has a lot of trust in the DBC employees.
"Some of them came from the industry," the client said. "Almost everyone there has been there more than 10 years. They're considered experts in the industry - what they've been able to do and their long history of running the program."
Another longtime client who did not want to give her name or that of her firm noted that a few other firms have been providing debt-structuring software programs for years. But more than its competitors, she said, DBC responded to the banking community's needs.
"Years ago, DBC just made modifications to their programs that became, over time, much more valuable and user-friendly and powerful in structuring bonds the way we needed in the industry," she said.
DBC, founded in the early 1980s, was a private company until January 2000, when then Thomson Media's municipal's group - a group that owned The Bond Buyer at the time - acquired it.
In November 2002, Thomson sold the DBC unit to SS&C Technologies, which today is a publicly listed company with 4,200 employees and almost $552 million in revenue. DBC has more than 260 client firms, Shalowitz said, with thousands of users across the U.S.