On Thursday, October 25th, the BDA held its Heads of Public Finance Roundtable in Washington, DC, which was sponsored by Build America Mutual and Quarles & Brady. The roundtable was attended by over 20 representatives at BDA member firms, which provided a venue for information sharing and discussion on the most recent market and regulatory topics.
At the roundtable, the discussion focused on the issues in the municipal securities market that were challenging for middle-market banks and dealers in 2018, including volume, changes in the tax law to advance refundings, and regulatory changes to retail markup disclosure. Participants also discussed what to expect in the new year, such as changes to 15c2-12, opportunities and challenges in infrastructure financing, and technological changes in the municipal securities market.
You can view the roundtable agenda here and a full recap follows below.
Market and Regulatory Discussion Topics
The 2019 Market Environment
Discussion Leader: Scott Beardsley, Crews and Associates
- What changes can we expect Congress to address in the coming year?
- Will a Democratic-led House support the reinstatement of advance refundings?
- What is the Trump Administration's position on an infrastructure plan in 2019?
The Loss of Advance Refundings and the Introduction of Alternative Financing Structures
Discussion Leader: David Medanich, Hilltop Securities
- Volume and business slow through the first half of the year
- Refunding volume down 60 to 65 percent in 2018
- Banks are more anxious to take on municipal debt
- Trends are indicating that banks are buying up the forwards market
- Are you seeing a resurgence of Cinderella bonds and Convertibles?
- How will technology change the municipal securities market over the coming years?
- What other technology trends, including blockchain, are on the horizon?
- What changes to market structure are anticipated for public finance over the next five years?
The Continued Evolution of the Municipal Private Market (Loans and Securities)
Discussion Leader: Dan Deaton, Nixon Peabody
- Private placements of bonds have been decreasing generally, but still remain an important part of the market
- Observing a slow down in the commercial market
- Anticipate a modest increase in issuances of new money bonds in 2019
- Banks are re-evaluating their strategy in the muni market (buy and hold vs. trading account)
- With the Fed expected to continue to raise rates, what will be in the impact to the muni market?
- How will the growth of foreign investments impact the muni market?
The Impact of Green Bonds in the Municipal Market
Discussion Leader: Scott Richbourg, BAM
- Limited awareness of the benefits of green bond issuance among market participants
- Perception vs Reality of green bond sales in the U.S. municipal market
- Access to investors and issuers of the municipal green bond market
- Introduction of BAM GreenStar designation
- You can read more about BAM's GreenStar initiative here
BDA Advocacy and Washington Update
Discussion Leader: Justin Underwood, BDA
- You can view the BDA's advocacy strategy here