The Shield – Recent Market Events & Headlines You May Have Missed…
We are now four months into the year and various credit and market developments continue to unfold, many of which are favorable to the borrower and issuer community. In case you missed them, highlighted here are some tidbits that you may find of interest as your organization establishes or advances
The Shield – Special News Alert
Recently, Moody’s released a proposed update to their higher education rating methodology. The update proposes to combine their existing methodology for four-year higher educational institutions with that for community colleges issuing revenue-backed debt; revise scorecard metrics, weights, and ranges (including replacements and additions); and assign issuer ratings to U.S. colleges
Basis Points – LIBOR Phase-out Update
A few weeks ago, Blue Rose and its sister company, HedgeStar, hosted a webinar relating to the phase-out of the LIBOR Index and what it means for participants in the municipal market. The webinar was well attended by approximately 200 registered participants and concluded with many well-thought questions by those
Review of Rating Agency Outlooks on the Higher Education Sector in 2021
The onset of the COVID-19 pandemic in 2020 has created significant new challenges for all higher education institutions and further exacerbated existing challenges. Faced with unprecedented disruptions to “status quo” methods of operation last March, colleges and universities have adapted admirably on the fly, shifting students to remote or hybrid
The Shield: March 2021 Municipal Market Update
Since we published our 2020 Mid-Year Market Update last June, the financial markets have calmed down from the historic turbulence experienced as a result of the COVID-19 pandemic. Two topics have come to the forefront of current municipal market discussion: the changing rate environment, and the continued efforts to transition
SPECIAL NEWS ALERT
As the market anticipated, the British Financial Conduct Authority formally announced this morning that all LIBOR tenors in multiple currencies will be discontinued or become non-representative. As a result, under current ISDA definitions, fallback spreads have been calculated and set according to previously described methodologies. Although known with certainty as
Basis Points: Benefit of OMS to SLGS in a Positively Sloping Yield Curve Environment
In past newsletters, we’ve often discussed the impact of an inverted yield curve environment on refunding escrows. Specifically, we’ve explained in detail the idiosyncrasies caused by an inverted yield curve that led to State and Local Government Series (SLGS) escrows outperforming open market securities (OMS) escrows (Comparing SLGS and OMS
Basis Points – Recent Developments in the Repo Market
In the past, Blue Rose has written about the use of Guaranteed Investment Contracts (“GICs”) and compared them with Flexible Repurchase Agreements (“Repo”). While the structural risks that we described then remain unchanged, recent market developments have begun to close the gap in yield between these two investment products, making
The Shield – Key Public Finance Themes for 2021
Key Public Finance Themes for 2021 It is just one month into calendar year 2021 and we are already seeing themes of the coming year emerge. Highlighted below are three themes to which our team is paying particularly close attention. LIBOR Transition The anticipated LIBOR transition is undoubtedly one of
Blue Rose’s Max Wilkinson promoted to Assistant Vice President
Mr. Wilkinson provides in-depth modeling, research, and analytics in support of the delivery of capital planning, debt and derivatives advisory, and reinvestment services to our clients. He is responsible for preparing analyses considering various bond structuring options, comparable issue pricings, institutional debt capacity constraints, credit rating models, and break-even refinancing
2020 Looking Back – Looking Forward
Capital markets in 2020 were defined by the same factors that affected our everyday lives: pandemic related ups and downs, stabilization with fiscal stimulus, and improving sentiment over the summer, an unforgettable presidential election, and hope-inspired relief from a vaccine. Equities have soared, and yields have declined across all sectors
Basis Points: LIBOR Fallback Protocol – Should you adhere?
As regular readers of Basis Points are aware, the London Interbank Offering Rate (LIBOR) is expected to be phased out and replaced with the Secured Overnight Financing Rate (SOFR). While there are many fundamental differences between these indices which we have previously discussed, a recent development in this process is
Gaining Liquidity by Liquidating Long-Dated Investment Contracts
Prior to the financial crisis, long-term interest rates were significantly higher than where they are currently. The graph below shows the decline of the 20-year LIBOR swap rate (as a proxy for long-term interest rates) since January 2007. A sharp decline in rates occurred early this year, creating all-time low rates.
Keeping Traditions in 2020
There has been very little normalcy in calendar year 2020. We as a country, our communities, and each of us individually have taken on challenges over the last 10 months that we couldn’t have imagined prior to this year. “We’re in this together” has been a message of hope and support as
Basis Points: LIBOR / SOFR Update
Since Blue Rose’s last update on the transition from LIBOR to SOFR the ARRC continues to push forward in meeting milestones laid out in its paced transition plan. Below are a few notable updates: The market turmoil experienced over the last 6 months related to the COVID-19 pandemic has
Blue Rose’s James McNulty, promoted to Managing Director
MINNEAPOLIS, MN – November 14, 2019 Mr. McNulty specializes in providing lead advisory services and financial analysis for higher education institution financings. In addition, he advises issuers through data-centric analysis including debt capacity and credit analysis. James also directs the Blue Rose Pricing Desk, coordinating internal pricing reviews and
The Shield: Fixed or Variable? A Recent Fed Policy Change Requires Further Consideration
Borrowers of long-term debt are always faced with this question: should we borrow on a fixed rate or a variable rate basis? This question arises irrespective of whether the borrowing will occur on a taxable or tax-exempt basis, or whether the borrower is a governmental, non-profit or corporate entity. It is a
Blue Rose’s Georgina Walleshauser, promoted to Associate
Ms. Walleshauser joined Blue Rose in 2017. As an Analyst, she was responsible for providing analytical, research, and transactional support to senior managers serving higher education, non-profit, and government clients with debt advisory, derivatives advisory, and reinvestment services. She also prepared debt capacity modeling, credit analysis, and market analysis to
Blue Rose’s Justin Krieg promoted to Senior Vice President
Justin Krieg provides financial and economic consulting services to the firm’s clients. Within the firm’s P3 advisory practice, Dr. Krieg utilizes his knowledge and experience to assist clients in understanding the P3 approach to procurement, determining the appropriateness of the range of delivery methods, and ensuring that the long-term P3
The Shield: Main Street Lending Program
Effective July 17, 2020, through September 30, 2020, Nonprofit entities can obtain federal loan dollars through two different Main Street Lending Program facilities (NONLF [1], & NOELF [2]). These facilities were added on top of the three existing lending facilities (MSNLF [3], MSPLF [4], MSELF [5]) meant to aid small
Hedging Treasuries in an Uncertain Market
Many higher education institutions and other borrowers in the municipal market are enticed by the low interest rates that are being reported in the press. When they speak with their banks, however, they find that the overall rates that could be achievable from issuing bonds in the current market are
Realizing the Benefit of an Existing Escrow Through a Tender Offer
There continues to be a disparity in the current market between pre-refunded municipal bonds and Treasury securities. Most escrows that were established at some point over the last several years contain either State and Local Government Securities (SLGS) or Open Market Securities (OMS) that have appreciated in value substantially due to
Blue Rose’s Max Wilkinson, promoted to Associate
Mr. Wilkinson provides in-depth modeling, research, and analytics in support of the delivery of capital planning, debt and derivatives advisory, and reinvestment services to our clients. He is responsible for preparing analyses considering various bond structuring options, comparable issue pricings, institutional debt capacity constraints, credit rating models, and break-even refinancing
The NEIU Social Justice Leadership Housing Award
The social unrest across our nation prompted me to re-examine our companies’ hiring practices and general opportunities within the framework of social justice. In this context, I’ve had the extreme privilege of working with the President’s Cabinet of Northeastern Illinois University. We are proud to have had a small role
The Perks of Hiring an Escrow Advisor
It is typical for issuers with an upcoming refunding transaction to engage an escrow bidding agent. The role of a bidding agent usually consists of soliciting bids for open market securities (“OMS”) with the award being contingent on these securities providing a benefit compared to State and Local Government Securities (“SLGS”)
An Introduction to Our Outstanding Additional Advisory Services
Basis Points – Reinvest Market Update November 2023
Benefits of Positive Arbitrage
The Shield – Third Quarter Market Update
Reinvest Market Update – Basis Points
Blue Rose Capital Advisors Annual Meeting 2023
The Shield – Final LIBOR Transition Update
Basis Points – Market Update August 2023
The Shield – Rating Agency Update: New S&P Criteria and FY2022 Medians
