Massachusetts College Agency Issues Banking, Underwriting RFQ

The Massachusetts State College Building Authority is searching for investment banking and underwriting services for an upcoming bond sale set for early 2008 as well as for any potential refunding opportunities. The authority wants to put together a team of up to five senior managers and co-managers for a duration of three to five years. Applications are due by Sept. 10.The MSCBA’s last sale was a $98 million bond deal that priced on Feb. 24, 2006, with Lehman Brothers as senior manager and Citi, Bear Stearns & Co., and First Albany Capital Inc. as co-managers.“The last time the authority procured underwriters they made it specific for the [2006] bond issue, so now we’ve been doing a new solicitation to cover us for at least a few years,” said assistant director Kate Murray. “We wanted to put together a team so that we could keep going, and also if any refunding opportunities happen to come up during that stretch of time, we would have already selected a team and be ready to proceed if the economics worked.”The agency has yet to decide if it will hold oral interviews. Qualifications include experience working with higher education facilities financing and bond issues for authorities within Massachusetts and commitment to the area.“In particular, a firm must demonstrate service orientation and strong technical, capital, marketing, and distribution strengths in a manner most advantageous to the authority,” according to the request for qualifications.The RFQ asks firms to detail their approaches to selling to the retail market, strategies with credit ratings and-or credit enhancement, and creation of a financing plan for the authority’s upcoming sale.The MSCBA expects to issue roughly $90 million early next year to help support repairs and renovations along with two residence hall expansion projects at two different schools.The authority issues debt on behalf of nine state colleges for dormitory financing and also manages the design and construction of those projects. It oversees 338 residence halls offering more than 12,500 beds throughout the state’s nine schools. Average annual occupancy rate is currently 100% and the authority generates roughly $65 million per year of gross residence hall revenues, according to the RFQ. The MSCBA has about $400 million of outstanding debt with annual debt service of approximately $28 million. The authority has begun to finance other higher educational facilities including student centers and dining, parking, and athletic facilities.