Massachusetts is looking to form a pool of financial advisers to assist it with upcoming bond and note deals.
The Treasurer’s Office aims to create two groups within the pool — financial advisers and pricing advisers. Officials plan to issue approximately $2 billion annually during the next five years to help finance infrastructure projects, according to the request for qualifications. In addition, Massachusetts utilizes short-term borrowing through bond anticipation note sales and issuance of commercial paper.
Selected firms will serve for a period of two years on an as-needed basis, according to the RFQ. Responses are due by 12 p.m. on June 3 and the state may choose to hold oral interviews.
The RFQ asks firms to list prior experience on negotiated and competitive borrowings with issuers similar to Massachusetts, any transactions that included an “innovative or unique” financing component that generated savings, and experience in creating debt-management policies for issuers. The state also requests firms interested in a pricing-adviser role to detail pre-pricing benchmarking and post-pricing analytics and include such reports in their responses.
Treasury officials are also looking for suggestions from advisers, including how to build a larger retail demand base in Massachusetts, increase floating-rate exposure in light of risk, utilize more of the taxable Build America Bond program, and implement more cost-effective compensation or designation methods. In addition, officials are looking to increase the state’s investor base.
“Based on your evaluation of current holders of commonwealth general obligation bonds, please comment on the relative importance of various buyer segments for future bond sales (e.g., retail, property and casualty companies, bond funds, relative value, international, etc.) both currently and in general,” the RFQ says. “Are there any segments that you believe are 'underrepresented’ in recent commonwealth sales? If so, please suggest ways in which the commonwealth could target those segments.”
Massachusetts historically has not had a pool of financial advisers and does not always use an outside financial advisory firm for its bond transactions. Siebert Brandford Shank & Co. was financial adviser on the state’s $450 million taxable BAB deal via competitive bid, which priced on May 5.
The state has more than $19 billion of long-term debt outstanding as of June 30, 2009. Moody’s Investors Service rates Massachusetts Aa1. Standard & Poor’s and Fitch Ratings rate it AA and AA-plus, respectively.