Prior to rejoining Blue Rose last month, I had the opportunity to sit on one of the Street’s reinvestment desks, where I submitted bids as a principal for many of the same products on which Blue Rose currently advises its clients. Below are a few of the lessons learned during this time period and how your Blue Rose advisor can help you optimize your returns and avoid unnecessary pitfalls.
Permitted Investments
Whether it’s a guaranteed investment contract, a repurchase agreement or a portfolio of securities, each investment strategy has its positives and negatives. Even within a portfolio approach, different securities might offer a higher yield but may have drawbacks, including credit risk and reduced liquidity. Accordingly, by working with your Blue Rose advisor, you can determine the best approach tailored for your specific situation. However, your options are far more limited if you do not have a broad range of permitted investments under your bond documents. Engage your advisor early in the process: Blue Rose can give you guidance when documents are first being drafted. Including the broadest language in your indenture does not obligate you to use anything with which you are not comfortable but excluding investments from your indenture will ensure that you are prevented from utilizing them in the future if you believe that they are appropriate.
Bid Process
The market does not like volatility. During the time period between bid submission and award to the winning bidder, markets can move significantly, thereby altering the economics of a potential transaction. While a bidder might be able to price some of this risk into its submission, by minimizing this risk you will receive more favorable terms or pricing. Insist that your advisor sends bid specs out early enough for the dealers to give it proper attention, especially if there are atypical terms or provisions. Additionally, be prepared to award the transaction as quickly as possible after bids submission. That means either being on the phone with your advisor or making sure that you are easily accessible at bid time. Work with your advisor and counsel to anticipate things that may happen at bid time so that you are prepared to accept or reject a term or condition without a detailed and time-consuming discussion.
We encourage you to reach out to your Blue Rose advisor to discuss your investment alternatives and to learn more about our bidding agent services.
Sam Gruer | [email protected] | 973-761-1741
Sam Gruer brings more than 30 years of capital market experience to his role as Managing Director at Blue Rose Capital Advisors, where he focuses on the firm’s business development efforts and providing senior advisory services. Mr. Gruer guides clients through the debt/swap/reinvestment transaction process by making strategic recommendations based on sound, thoughtful, and sophisticated analysis. During his career, Mr. Gruer has advised on and/or executed bond, derivative, and reinvest transactions totaling more than $50 billion for tax-exempt borrowers and financial institutions. He also offers expert advice on determining the optimal structure for reinvestment of bond proceeds by evaluating risk tolerance, identifying legal restrictions, and estimating cash flow needs for his clients. This expertise comes from serving as a structurer, trader, and marketer of interest rate derivatives and defeasance products at some of the largest banks and broker/dealers. He serves clients from our New York regional office.
In his latest role at Mesirow, Mr. Gruer specialized in serving Northeast and Southeast clients who issue general obligation and revenue-backed bonds and served as co-head of Mesirow’s Defeasance Solutions group. In 2008, Mr. Gruer co-founded Cityview Capital Solutions, serving as Managing Director and providing debt, swap, asset/liability management, and reinvestment advisory services to municipal and not-for-profit borrowers. His prior experience also includes leadership roles at Deutsche Bank as Director of Derivative Structuring, at JPMorgan Chase as co-founder of the municipal derivatives department, and at Prudential Securities as Head of New Products for the municipal securities division. Earlier in his career, he worked in municipal finance at Goldman Sachs and Morgan Stanley
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