Investment Dealers' Digest
December 4, 2009
Annual awards salute novel deals in the world of municipal finance
By Ken Tarbous
This week some 200 muni finance specialists came together to honor the best and brightest in The Bond Buyer's 8th annual "Deal of the Year" awards at the New York Academy of Sciences in Lower Manhattan.
The winner of the top award was a transaction that will help finance the extension of rail service to Washington, D.C.'s Dulles International Airport from the nation's capital. Talk among attendees focused on the positive role the municipal finance market plays in creating and maintaining the nation's public institutions, especially striking in a year when most every level of government in the U.S. has been broadly criticized for its spending and budget deficits.
"Public finance is essential to America. It supports schools, builds infrastructure, and helps develop communities," Robert Tucker, a managing director in fixed-income investor relations at bond insurer Assured Guaranty, told IDD.
The Bond Buyer's Deal of the Year went to the Metropolitan Washington Airports Authority's $963.29 million Dulles Toll Road project.
The MWAA has a concession to run the Dulles Toll Road and the project uses the revenue to fund the first phase of a 23-mile extension of the Dulles Corridor Metrorail to parts of Virginia and to connect the airport to downtown D.C. as well as other capital improvements. "We were an airport operating a toll road to build rail," said Andrew Rountree, deputy CFO of the authority. "Oddly enough, we waited 47 years for the worst economic downturn to make this dream happen."
Dulles airport was dedicated by President John F. Kennedy back in 1962.
The MWAA deal involved a unique mix of capital improvement bonds, capital appreciation bonds, and Build America Bonds in capturing the revenues of an existing toll road to finance a transit project.
More than 60 transactions, ranging in size from a few million dollars to hundreds of millions, priced between Oct. 1, 2008, and Sept. 30, 2009, were nominated for the 2009 awards.
The federal government was presented with an award for market-changing innovations, including Build America Bonds (BABs) and Qualified School Construction Bonds (QSCBs), created under the American Recovery and Reinvestment Act.
Among the finalists was the District of Columbia, which saw a turnaround since the 1990s when it was saddled with a junk rating and operated under the supervision of a federal financial control board. The district's $801 million deal was backed by income tax revenue and garnered double-A and triple-A ratings.
"Ten years ago the district was a joke on Wall Street. I don't think we would have made it to this event, even as doorkeeper," said Natwar Gandhi, D.C.'s CFO.
Recognizing the people in the public and private sectors who contribute to the greater good is important, attendees said.
"It's a great opportunity, in a difficult economic environment, to celebrate the efforts of the professionals whose hard work benefits the municipalities and serves the investors' needs," said David Safer, vice president at BNY Mellon, who worked as bond trustee on several of the deals recognized by The Bond Buyer.
The awards program raised $5,000 for Smile Train, a charity providing cleft lip and cleft palate surgery to children in need around the world, and it marks the beginning of the season for deal awards. After all, The Bond Buyer's sister publication IDD has its own deal of the year awards and the submissions deadline is Dec. 18.
Deal of the Year finalists were selected from The Bond Buyer's designated U.S. regions in large and small issuer categories determined by most recent fiscal year gross revenue of the issuer or the entity financed. Issuers in the small deal category include those with annual revenue of $70 million or less, or beneficiaries with those revenue levels in conduit deals. Large deals were those above $70 million.
