In this session, experienced issuers and municipal advisors will discuss past refundings, their strategy, and how they measured the success of their refunding transactions. In light of the points made in prior sessions, panelists will explore the evaluation of refundings generally, the need to re-examine conventions, and the potential outcomes for altering strategy and practices in the future.

Managing the cost of financing is one of the highest priority responsibilities for agency finance professionals. Refunding is one of the most impactful financial management tools issuers can use to mitigate risk and reduce the cost of debt, or is it? The preconference sessions will explore refunding strategies, the financial justifications, the call option itself, and the circumstances when refundings may not be as efficient as issuers would like them to be. This program is intended to help issuers to understand and challenge conventions, and more fully consider the factors that can drive the success of future refunding transactions.

Safdar Mirza co-heads the quantitative strategies group at J.P. Morgan and has more than 20 years of banking and financial advisory experience. He has worked on more than $50 billion of complex municipal transactions that have involved refundings and restructurings, tenders and exchanges, fixed and floating derivative products and unwinds, and various cash and synthetic products. Mr. Mirza leads a group that has developed and used an array of analytical tools to help issuers solve complex financing, optimization and tax issues. Clients for whom Mr. Mirza has served as lead quantitative resource include large state and local governments, public university systems and private colleges, airport and surface transportation agencies, public power clients, water and wastewater enterprises, state revolving funds, and large healthcare systems. Mr. Mirza holds a B.A. in Economics from University of California, Berkeley.

How have market preferences and the needs of issuers shaped the structure of municipal bonds? Why are municipal bonds refunded before maturity or the call date? This session will examine structural conventions of municipal bonds and the inevitability of refunding. Presenters will explore latest refunding strategies, practices, and evaluation methods for achieving the highest value in a refunding transaction.

Most municipal bonds have been structured with a 5% coupon, callable at par in Year 10. Issuers pay for the considerable cost of the par call by accepting a lower sale price. Subsequent refunding, by calling or another means prior to the call date, generates cashflow savings but forfeits valuable call options. This session will explain how to factor the forfeited option value into the refunding decision using the refunding efficiency approach. Five percent bonds callable at par are virtually certain to be refunded by Year 10, even if interest rates increase. To reduce the cost of recurring transactions, the presenter will also explore alternative call structures.

Robert Hannay joined the East Bay Municipal Utility District (EBMUD) in 2018 and serves as Treasury Manager, leading the District’s Treasury and Data Science teams. He oversees EBMUD’s debt management, investment management, rate planning, and long-range financial planning functions, and provides financial and investment management support for the District’s retirement system.

Prior to joining EBMUD, Mr. Hannay worked in consulting, at a credit rating agency, at a municipal financial advisory firm, and in public finance investment banking. He holds a Bachelor of Science in Civil Engineering from Texas A&M University and master’s degrees in Civil Engineering and City Planning from the University of California, Berkeley. Mr. Hannay is a Chartered Financial Analyst (CFA) charterholder.

Tony joined Barclays Capital in 2009 after serving as the Western Regional Head at Citi for 14 years. He has been providing investment banking services to state and local governments in the western states since 1983 and has structuring expertise which includes long-term fixed rate and variable rate revenue bonds, general obligation bonds, toll revenue bonds, sales tax backed special purpose bonds, certificates of participation, lease revenue bonds and tax and revenue anticipation notes. Since 1983, Tony has senior managed over $90 billion worth of transactions including two Institutional Investor “Deals of the Year”, three Bond Buyer “Deals of the Year” and several transactions which were the first of their kind including the first taxable municipal offering, the first foreign currency denominated municipal transaction and the first non-recourse financing for a start-up toll road. Tony’s list of senior managed clients includes the State of California, the counties of Los Angeles, Riverside, San Bernardino, Santa Clara Orange, Kern, Alameda, Contra Costa and San Diego as well as transportation issuers such as the Los Angeles County Metropolitan Transportation Authority, Santa Clara VTA, the San Diego Regional Transportation Commission (SANDAG), the Transportation Corridor Agencies (Orange County) and the Bay Area Toll Authority (BATA). Tony has recently completed senior managed transactions to fund a casino expansion in Riverside County, the new Wild Rivers Water Park in Orange County, five new hangars and an FBO in Austin (TX), a new passenger terminal at Paine Field north of Seattle and 10GW of solar projects in Texas. Tony received his bachelor’s degree in Mathematics from the University of California, Los Angeles and an M.B.A. degree in Finance from the University of California, Berkeley. Prior to becoming an investment banker, Tony was a middle and high school math teacher.

Mark Capell is a senior underwriter at BAM, covering the Western Region. Prior to joining BAM, he was a Director of Assured Guaranty, Western States, and, prior to that, he held a similar position at FSA. Earlier, he was a Director at Fitch Ratings from 1998 through 2004. He holds a B.A. from U.C. Davis and a Masters in Public Administration from the University of Southern California.