The Fisc

Great lessons from the Golden State.

It’s only fitting that BondLink held one of our largest events of the year in the State established as one of the largest muni issuers in the country - California. 

A packed room full of muni finance professionals came to Los Angeles County to hear what’s top of mind for local issuers, gain insights from leading investors in the State, and spend some rare quality time outside of transactions with one another. 

To put it modestly, an impressive speaker lineup was assembled to address the group:

• Keith Knox, Treasurer, Los Angeles County 
• Dan Wiles, Assistant Treasurer & Tax Collector, Los Angeles County
• Allen Li, Managing Director Municipal Bonds, Guggenheim Partners
• Marla Bleavins, CFO, Deputy Executive Director of Finance & Administration, Port of Los Angeles
• Tatiana Starostina, Chief Financial Officer, Los Angeles World Airports
• Rodney Johnson, Deputy Executive Officer, Finance, Treasury, Los Angeles County Metropolitan Transportation Authority
• Adam Bauer, President and Chief Executive Officer,  Fieldman, Rolapp & Associates
• Sam Smalls, Treasury and Debt Manager, Metropolitan Water District of Southern California
• Jon Schotz, Co-Managing Partner, Saybrook Fund Advisors, LLC

The skies may have been cloudy on Wednesday, but the lessons were clear. Here were some of the best points made from our speakers throughout the day.

1. Issuers can benefit from making financial information more accessible and more timely

Plainly put - investors are doing more research with fewer resources. Volatility has now been a key theme in our market for months. As some municipalities are flush with cash from various sources, other obligors are facing tougher times with restricted budgets and darker outlooks. Leaner research teams on the buyside are being forced to execute more difficult surveillance, and it’s common to hear that a buyer will pass on a bond offering simply because they can’t find the necessary information in time to make a decision. 

That’s why it’s more important than ever for issuers to make their information as easy to find and accessible to all. Issuers who make it easier for investors to find financial reports, operating documents, and more on a consistent basis stand a good chance to earn lasting, beneficial goodwill with the buy-side. Speakers like Los Angeles County, Los Angeles Metro, and the Port of Los Angeles are all doing exactly that with their investor relations programs.

2. Everything “green” is still evolving

More issuers are experimenting with green-labeled bonds, more thorough sustainability reports, and other dedicated efforts to report on specific ESG credit factors. A consistent result of these efforts has been increased investor interest, which can have multiple benefits on an issuer’s capital program. 

While some pundits will say that all municipal bonds are in some fashion sustainable, bond investors appreciate the explicit messaging around an issuer’s environmental or sustainable goals. Finance officers interested in exploring the green bond market should observe how other issuers are handling ongoing reporting around the environmentally beneficial projects that are funded by green bonds. 

In the meantime, what’s the most important thing we can all do? Ensure that all your information is reaching the market, so all interested parties can have informed conversations and make educated decisions.

3. Build and rely on a strong network

Something that really stood out is how every speaker mentioned at least one valuable piece of knowledge they’ve learned from a close peer in our market. 

As the bond market continues to grapple with higher rates, lowering of investor demand, and volatility, it's crucial to stay in the know with how other issuers are approaching their capital financing needs. Through trade associations like the GFOA, issuers can tap their network for valuable approaches. You never know what creative strategy, financing structure, or investor outreach step might benefit your bond program. 

Governments in the muni bond market will be challenged more than ever in 2023. BondLink is committed to initiating more conversations like the ones we had in Los Angeles County last week so we can all approach the bond market with greater confidence.