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About Financial Advisory

Since 1946, FirstSouthwest has been a trusted leader in public finance. We provide expert financial advisory services to more than 1,600 clients across 26 offices in 14 states and Washington, D.C.

Benefits
Our financial advisory professionals work together across geographical and practice group boundaries to help each client seamlessly receive the benefits of the entire Firm’s expertise. These benefits include:
  • Our professionals proactively share with each client the Firm's collective specialized expertise, local knowledge and national experience
  • Our professionals are accessible and responsive to each client.
  • FirstSouthwest’s direct participation in the capital markets affords financial advisory clients with real-time local and national market sensitivity to make informed decisions.
  • FirstSouthwest’s in-house expertise in arbitrage rebate, government investment pools, investment advisory, disclosure, trading and municipal underwriting is readily available to each financial advisory client.
Areas of Expertise
FirstSouthwest maintains deep and proven expertise across a variety of public finance sectors:
  • Airports
  • Benefit Plan Services
  • Convention Centers/Hotels
  • Correctional Facilities
  • General Obligation
  • Healthcare
  • Higher Education
  • Housing
  • Leasing
  • Mass Transit
  • Ports
  • Public Power
  • Public-Private Partnerships
  • Rapid Transit
  • School Districts
  • Special Districts/Development
  • State Revolving Funds
  • Streets and Highways
  • Student Loans
  • Toll Roads
  • Water and Wastewater

    To learn more about our financial advisory expertise in specific sectors, please visit our Sector Expertise page.

 

Case Studies

Michigan Finance Authority 2012

12/5/2012 12:00:00 AM

Michigan Finance Authority
2012

On December 5, 2012 the MFA Series 2012 Unemployment Obligation Assessment Revenue Bond Deal was selected for the 2012 National Bond Buyer Deal of the Year award.

Early 2012 saw significant negative rating agency actions with respect to several major credit provider banks, including Citibank in its role as LOC provider on the MFA Series 2011 UI VRDBs.  Early in March, MFA reassembled its financing team and began work on refinancing Series 2011 with a structure that would lock in historically low long-term interest rates, reduce exposure to the impact of any further deterioration in the LOC provider’s credit ratings, and reduce the probability of large increases in the annual Obligation Assessment (OA) imposed on Michigan’s participating employers across the life of the bond issue.  This effort began with fresh cash flow analyses produced by FirstSouthwest and progressed to the examination of structural elements and concepts that might be effectively utilized to produce the optimum mix of scheduled non-callable and optionally callable debt at the lowest all-in cost to MFA.  FirstSouthwest’s previous experience as FA on the Texas UI transactions combined with its highly customized cash flow model was critical in this analysis, allowing for very rapid comparative analyses of various combinations of structural components and pricing assumptions.  The final structure produced through that iterative process resulted in a $1.462 billion fixed rate non-callable Series 2012A, a $1.2 billion fixed rate callable Series 2012B that offered investors an extremely high level of predictability with respect to call date, and a $250 million VRDB Series 2012C that would be called with the first available excess revenues above scheduled debt service. 

Concurrently, FirstSouthwest utilized its experience with the Texas UI transaction to lead the ratings process with all three of the major rating agencies.  Based on the concerns that had emerged in the rating process with the Texas issue, FirstSouthwest worked closely with the MFA, Treasury, Michigan UIA and underwriters to develop a ratings strategy that, combined with the final structure, would ultimately result in the transaction being the first, and currently still the only UI transaction to receive “AAA” ratings from Moody’s, S&P and Fitch.

Armed with three AAA ratings, a highly predictable amortization for the Series B callable bonds, and a long history of excellent UI tax collections rates, FirstSouthwest accompanied the MFA, Treasury and UI on a four day investor road show trip to Chicago, Boston, New York and Detroit to provide potential investors with an in-depth look at the security, credit, management expertise, and cash-flow-predictability features of this unique and precedent setting UI financing. 

With the investor interest generated by the road show still fresh, FirstSouthwest suggested that the underwriters price the Series B callable bonds first, which was met by very heavy demand from investors seeking a little bit of additional yield with very low risk.  The heavy over-subscription for those bonds allowed for a subsequent pricing of the non-callable Series A bonds at extremely aggressive interest rates for an all-in TIC of 1.80%.
 

Atlanta, Georgia /Department of Aviation

2/16/2012 12:00:00 AM

 

Synopsis of Results: Absent from the capital markets since November 2004, the City of Atlanta’s Department of Aviation (“DOA”) re-entered the marketplace by executing a series of two (2) transactions totaling over $1.1 billion between November 2010 and December 2010. By executing this program, FirstSouthwest, acting as co-financial advisor assisted the City in achieving the following results; (a) obtained low-cost completion financing for the Airport’s new $1.5 billion Maynard H. Jackson International Terminal (“MHJIT”) project, (b) eliminated all the variable rate and counterparty exposure for the Airport, (c) reduced debt service by over $49 million (on a present value basis) and (d) achieved bondholder consent to indenture changes that allowed the Airport to release over $78 million in excess cash from its debt service reserve fund (“DSRF”). The combined total financial benefit to the City exceeded $127 million which will allow for lower charges to the City’s airline partners and thus continue to make the Airport one of the lowest cost airports in the U.S.   Moreover, through the completion of these transactions, FirstSouthwest was able to significantly improve DOA’s balance sheet and ensure that funds were available to complete MHJIT, the largest capital project in the southeastern U.S.  
Summary of Financial Transactions: As the capital markets experienced severe disruptions in 2008 through 2010, the City and DOA confronted significant financial challenges. Due to the downgrade of the liquidity banks and bond insurer on the DOA’s variable rate bonds, the DOA’s normally low cost variable rate program experienced short-term rates as high as 8% and several failed remarketing periods. Certain tranches of the variable rate program became bank held bonds and reset at a default rate using an accelerated 5 year amortization. Additionally, the downgrade of most of the DOA’s surety providers below investment grade required the DOA to refill the DSRF by making monthly cash deposits out of its cash reserves. The combination of paying higher interest rates and making monthly cash deposits strained the DOA’s cash reserves at the same time the DOA was in the midst of constructing and funding the $1.55 billion MHJIT. In order to address this, FirstSouthwest helped the City and DOA develop a comprehensive strategic financial plan to simplify and improve the Airport’s debt structure and eliminate its variable interest rate risk and counterparty exposure. The strategy was implemented through multiple bond transactions in a short timeframe, as detailed below: 
Completion Financing (Series 2010A&B) for MHJIT:   In November 2010, FirstSouthwest worked with the City and the Airport, in close cooperation with its airline partners, to successfully fund the completion financing for MHJIT through the issuance of $177,990,000 of General Airport Revenue Bonds (GARBs) and $409,810,000 of Passenger Facility Charge Revenue Hybrid Bonds (PFC bonds). As the fastest growing major international gateway in the United States, the MHJIT project is critical to the Airport’s maintaining of its competitive edge.   As a result of receiving these bond proceeds, the project cost was fully funded and on-schedule to open in the spring of 2012. The completion financing was a very successful transaction as illustrated by its low all-in true interest cost of 4.18% and the impressive demand for the Airport’s bonds. The overall transaction was more than 2x oversubscribed in the aggregate and certain maturities were more than 5x oversubscribed. Additionally, the Airport’s spreads to MMD ranged from 73 to 108 basis points – one of the tightest spreads of all major airport transactions in the 4th quarter of 2010.
Another key feature of the financing involved the Airport negotiating a successful extension and modification of the Lease Agreements with Delta Air Lines and the other major airlines at the Airport.   The agreement was set to expire on September 20, 2010. However, it has been extended by 7 years with generally favorable amendments. The amended agreements detailed the terms under which MHJIT was funded and operated and provided pre-approval for certain additional Capital Improvement Plan (CIP) projects and contractual payments to the airlines in FY 2013-2016 in an aggregate amount up to the $30 million. This was done in order to maintain a minimum 1.5 times debt service coverage ratio. Based upon the new Lease Agreement and other credit characteristics, FirstSouthwest helped the City and the DOA obtain a rating upgrade, from A2 to A1 from Moody’s for the Hybrid Bond credit, which was the first upgrade of a major airport credit in 2010, and affirmation of its other ratings. 
Refunding of the Series 2003RF-B/C Variable Rate Bonds to Fixed Rates: In December 2010 (a month after closing the MHJIT completion financing), FirstSouthwest structured the issuance of $524.045 million in long-term fixed rate bonds to refund all the outstanding principal of its Series 2003RF-B/C variable rate bonds. This action was precipitated by the downgrade of the insurer on the bonds and the termination of the Standby Bond Purchase Agreement by the Liquidity Providers. The termination asserted by the Liquidity Providers resulted in an immediate suspension of all bondholders rights to optionally tender the bonds. Pursuant to the provisions of the Master Bond Ordinance (“MBO”), interest on approximately 85% of the bonds reset at SIFMA plus 2% per annum. Approximately 15% of the bonds were being held as Bank Bonds and reset at an even higher periodic rate. Moreover, Bank Bonds were subject to accelerated redemption on each interest payment date. Prior to the refunding, the Airport was fully exposed to interest rate fluctuations. The refunding of these variable rate bonds mitigated and removed the interest rate exposure for the Airport. As a result of implementing this refunding, the City reduced the Airport’s variable rate debt from 40% of its outstanding debt profile to zero and eliminated all counterparty risks. 

Michigan Finance Authority

5/11/2012 12:00:00 AM

 

Michigan Finance Authority
$3,323,000,000
Unemployment Obligation Assessment Variable Rate Demand Revenue Bonds, Series  2011
With our co-financial advisor, R.W. Baird, FirstSouthwest:
  • Created a cash flow model to analyze the effects of changes in key assumptions, including employment, wage base, benefit payment, SUTA revenues, alternate revenue streams, and structure and term of bond financing. In all cases, each cash flow run generated both a “capital markets solution” scenario and a “status quo” scenario to permit side by side comparisons of outcomes, including the impact on employers.
     
  • Provided advice and input on at the development of legislation that would take advantage of lessons learned through the Texas Public Finance Authority UI financings.
     
  • Generated additional cash flow modeling that was utilized to answer questions from legislators or to illustrate points in presentations made to various house and senate committees with jurisdiction over the legislation at various stages in its evolution.
     
  • Helped draft the RFP for underwriters that encouraged respondents to offer short term or interim financing solutions that would permit a 2011 payoff of the outstanding FUA loan balance prior to December 31, 2011.
     
  • Assisted in the analysis of the responses to the Underwriter RFP; the selection team picked Citigroup as the underwriter and remarketing agent for a variable rate demand bond financing to repay the federal loan. Citibank provided the Letter of Credit for the transaction, which closed on December 28, 2011.
It is expected that the variable rate demand bonds will be refunded into a fixed rate transaction upon receiving long-term rating in 2012.

Recent Transactions

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DateAmountClient NameClient LocationTransaction TypeSector
5/31/2012$491,814.00Bolton, MAMassachusettsBANs, S12Town
5/31/2012$53,100,000.00Newport, RIRhode IslandDrinking Wtr SRF, S12 (RICWFA)City
5/31/2012$34,620,000.00Rhode Island Clean Wtr Fin AuthRhode IslandSafe Drinking Wtr Revolving Fnd Bds, S12AState Agency/Authority
5/31/2012$4,975,000.00Mississippi, State ofMississippiLease Rev COPs, S12aState Agency/Authority
5/31/2012$146,260,000.00Dallas, TXTexasSpec Fac Rev Bds, S12 (Love Field)City
5/31/2012$47,578,202.00Framingham, MAMassachusettsGO BANs ,S12Town
5/31/2012$0.00Pawtucket Public WSB, RIRhode IslandDrinking Wtr SRF, S12 (RICWFA) Water Supply District
5/31/2012$1,955,000.00Pawtucket, RIRhode IslandDrinking Wtr SRF, S12 (RICWFA)City
5/31/2012$91,585,000.00Northwest ISD, TXTexasUT Schl Bldg & Rfdg Bds, S12Independent School District
5/30/2012$323,000.00Ayer Shirley RSD, MAMassachusettsGO BANs, S12Regional School District
5/30/2012$5,263,871.00Bellingham, MAMassachusettsGO BANs, S12Town
5/30/2012$75,000.00Bellingham, MAMassachusettsGO BANs, S12BTown
5/30/2012$9,390,000.00Cinco Southwest MUD 1, TXTexasCont Rev Rd Bds, S12Municipal Utility District
5/30/2012$250,000,000.00Matanuska Elect. Ass., NYNew York2012 Interim FinancingOther - Misc.
5/30/2012$8,968,090.00Nantucket, MAMassachusettsGO BANs, S12Town
5/30/2012$16,015,000.00Nantucket, MAMassachusettsGO Muni Purp Ln Bds, S12Town
5/24/2012$21,370,000.00Navarro CCD, TXTexasCons. Fund Rev & Rfdg Bds, S12Higher Education
5/24/2012$7,235,000.00Jefferson ISD, TXTexasUT Rfdg Bds, S12Independent School District
5/24/2012$2,364,000.00New Shoreham, RIRhode IslandGO Bds, S12ATown
5/24/2012$5,340,000.00New Shoreham, RIRhode IslandGO Rfdg Bds, S12BTown
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Case Studies

  • Atlanta, Georgia /Department of Aviation

  • Michigan Finance Authority 2012

  • Michigan Finance Authority

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