NEW YORK, June 11, 2013 /CNW/ - RBC Capital Markets' Municipal Markets group hosted the industry's first-ever municipal conference focused on SIFMA-Indexed Floating Rate Notes (FRNs) on Friday, June 7, 2013. The event, held at the Conrad Hotel in New York City, brought together over 180 of the industry's top investors and issuers to discuss the emergence of FRNs following the recent period of market challenges.
"The financial markets have significantly evolved over past several years, and the municipal finance industry has responded accordingly," said Mark Maroney, Head of U.S. Rates, Municipals and Securitized Products at RBC Capital Markets. "FRNs have been a common form of financing in the corporate and asset-backed debt markets to gain access to variable interest costs of funds without risks to the short-term bank market, and now the municipal industry is following suit by adopting the product within our own market."
Chris Hamel, Head of the Municipal Finance group at RBC Capital Markets, added, "Within our client base, we have seen a significant uptake in interest in FRNs over the last few years, as evidenced by the 89 industry-wide FRN transactions totaling $16 billion since 2009. Today's event convenes some of the biggest players in the space to further examine the opportunities and challenges in our market and we are thrilled to host this opportunity."
Following a welcome address from Hamel, keynote speaker Mark Muller, Senior Portfolio Manager at Loews Corporation, discussed the changes in the municipal market landscape over the last five years and his view looking forward.
Chris Mauro, RBC's Head of U.S. Municipals Strategy, then discussed the evolution of the short-term market and Tom Carlson, Director within the Municipal Capital Markets group, presented an overview of public FRNs. Two panel discussions on the market followed.
The "Depth and Longevity of the Market" panel put forth top investors in the market to offer their perspectives on the use of FRNs over the long-term. Moderated by Jaime Durando, RBC's Managing Director and Head of Municipal Syndication, panelists included:
- Lyle Fitterer, Managing Director, Wells Capital Management
- Justin Schwartz, Portfolio Manager, Vanguard
- James Pruskowski, Managing Director & Portfolio Manager, Head of Municipal Institutional & Wealth Management, BlackRock
The investor panelists discussed how FRNs are an attractive asset because they provide protection against interest rate risk, particularly in the current environment.
The second panel, titled "The Role of FRNs in Municipal Debt Programs," allowed issuers in the market to offer their own perspectives on the trend. John Puig, RBC Capital Markets' Managing Director, Municipal Finance, moderated the panel, which included:
- Nikolaus Grieshaber, Chief Financial Officer, Pennsylvania Turnpike
- Carol Kostik, Deputy Comptroller for Public Finance, Office of the New York City Comptroller
- Katherine McManus, Deputy General Counsel Finance, New York Metropolitan Transportation Authority
- Donna Manuelli, Chief Financial Officer, New Jersey Turnpike Authority
The issuer panelists discussed how the municipal market has matured to such a degree that there is now a much larger investor base than there was previously and, as a result, the pricing in the market has become a lot more efficient, allowing issuers to gain floating rate exposure at a cost-effective price.
RBC's Municipal Markets group has underwritten more than $4 billion in FRNs since 2012 and is ranked as the top issuer of the debt for both 2012 and 2013.
About RBC Capital Markets' Municipal Markets Group
RBC Capital Markets' municipal markets group employs more than 345 people in 26 cities, and in 2012 ranked fifth for senior managed negotiated transactions by Thomson Reuters. The group provides products and services annually to hundreds of municipal issuers across a broad range of sectors, including: healthcare, higher education, housing, K-12 education, public power, special districts, student loans and transportation. The firm is one of the country's most active underwriters of municipal bonds in terms of total number of senior managed issues, underwriting hundreds of issues annually. For more information, please visit www.rbccm.com/municipalfinance.
About RBC Capital Markets
RBC Capital Markets is the corporate and investment banking arm of the Royal Bank of Canada, the 4th largest bank in North America by market capitalization. RBC Capital Markets is a premier investment bank that provides a focused set of products, services and expertise to corporations, institutional investors and governments around the world. With over 6,500 professionals in 15 countries, we deliver our products and services to clients in over 100 countries through operations across North America, Europe and the Asia-Pacific region. For more information, please visit www.rbccm.com.
For further information:
Elisa Barsotti, 212 618-2057, [email protected]