New Jersey will revamp its underwriting pool in the next few weeks, with an eye to bringing in firms that offer transportation financing strategies for the state.
Treasury Department officials are looking to create four levels of banking services, with a senior manager pool of up to 10 firms, a senior co-manager group of five underwriters, and a co-managing pool of roughly 30 firms. Any banks not selected for those three groups may be included in a selling pool, according to the request for qualifications.
Contracts will last for one year and the state may opt to extend agreements for two additional terms of one year each. Firms will work on New Jersey general obligation debt and also bonds and notes issued through authorities and backed by a state pledge.
The RFQ will enlarge the state's selection of book-runners and managers. In 2006, officials created a five-member senior management pool that now includes only Goldman, Sachs & Co., Merrill Lynch & Co., and Morgan Stanley. At the time, it also included Bear, Stearns & Co. and UBS Securities LLC, which have now left the business. The state at that time also formed a co-managing group of 30 firms. Those contracts will expire at the end of June, according to Treasury spokesman Tom Vincz.
Senior manager and senior co-manager applicants must submit financing proposals in regard to New Jersey Transportation Trust Fund Authority bonds. As currently configured, the agency will run out of bonding capacity in fiscal 2011.
Treasury officials placed a $350 million NJTTFA deal on the day-to-day calendar after Merrill priced the deal for retail on April 27 yet held off on institutional sales.
"Provide a multiyear plan of finance for NJTTFA whose goal is to maximize the amount of bonds which can be issued for fiscal 2010 and fiscal 2011 while minimizing the cost of capital," the RFQ says. "You must explain (i.e. justify) your interest rate assumptions for each of the transactions in your plan of finance."
The RFQ also asks firms to detail any innovative ideas for financing transportation infrastructure either through the NJTTFA or through alternative means, list potential debt service savings opportunities, and provide any marketing strategies that would boost investor demand.
Questions regarding the RFQ are due May 11. Responses are due at 3 p.m. Eastern Daylight Time on May 27.