Item 23 - Pension Debt Refinancing Update and Underwriter Selection

Home Browse Search

investment products and services to institutional accounts globally. Our sales desk has also been instrumental to our #1 league table ranking over the last nine consecutive years. ■ Fully Integrated Taxable Distribution: Unlike many firms that abdicate the marketing and pricing of taxable municipal bonds to their high-grade corporate desk, the BofA municipal desk partners with our corporate desk to access a broader investor base and leads the marketing and underwriting itself on behalf of our municipal clients, culminating in seamless integration with traditional taxable buyers. As a leading underwriter of high-grade corporate bonds, syndicated loans and private placements, we are well positioned to market the City's bonds to investors in the corporate/taxable space. ■ Power of Global Connections: Finally, BofA is one of a select few of truly global firms. With operations in each of the major metropolises around the globe, our underwriting desk is fully equipped to tap into the insights offered from our foreign sales and trading desks should international buyers become interested in the City's sale. The potential large size of the City's offering makes it a candidate for marketing to international investors. Unlike some competitors, BofA has the ability to receive orders directly off its municipal underwriting desk from foreign investors. Further, BofA's global footprint ensures that we have pre-existing relationships with law firms in foreign jurisdictions that can quickly approve of the various international "blue sky" disclosures required for the City to pursue an international marketing campaign. ■ Retail Platform: BofA has one of the industry's largest and most extensive retail distribution networks, comprised of 683 domestic branch offices supported by 17,442 retail financial advisors. With over 7 million individual investors and nearly $3 trillion in retail assets under management, municipal securities represent the #2 product sold by BofA to retail investors. Through our vast distribution network and taxable underwriting experience, BofA has delivered substantial orders on POB financings. For example, BofA garnered orders from 76 unique investors on the City of Riverside's $432 million POBs, including orders from municipalities, insurance companies, bond funds, money managers, and individual retail. Key Investor Targets. In marketing the City's proposed bonds, BofA would canvas a broad universe of investors with particular focus on the following: ■ International Investors: BofA is seeing increasing international interest in taxable municipal financings. The City's offering may be attractive to international investors given the large issue size and strong ratings. ■ Municipalities: We would target municipalities who will be active mostly in the first five years of the curve. Depending on market conditions, BofA may recommend that priority be given to municipalities. ■ Life, Property and Casualty Insurers: These investors can purchase sizable amounts and typically prefer long- dated structures. They will be key targets for the proposed sale and likely would participate through the final maturity of the City's POBs. ■ Top Holders of 'AA' Rated POBs: Top holders of other highly rated taxable California POBs nationally would be an additional target for the City's sale. Notably, top holders of California taxable 'AA' rated POBs who do not hold any of the City's general fund obligations include BlackRock, Wellington, Goldman Sachs, 40186 Advisors and Hartford among others. ■ Existing and Top LRB/COP Holders: Targeting existing holders of the City's outstanding bonds will build the base of an order book, as these investors already are knowledgeable of the credit and may look to substantiate their holdings. We also would target top California taxable LRB/COP holders who are familiar with California general fund credits. Institutional Marketing Plan. Given the taxable nature and large par amount of the City's proposed financing, we expect institutional investors to build a strong base of investor demand for the City's bonds. Below are strategies we would employ to market to institutional accounts: ® International Disclosure: To expand the investor base, the City's POS may include an "international wrapper". International language in the POS would allow the City to distribute bonds internationally at minimal cost. Ignite Early Conversations with EMMA Notice: We recommend that the City post a "Notice of Potential Bond Sale" on EMMA once a plan of finance has been ironed out. At that point, our underwriters can direct key investor targets we have identified, to the public EMMA notice and facilitate preliminary conversations. 1Wiil_19 1 Page 7 BofA SECURITIES ��