Mesirow's public finance and institutional sales and trading groups will collaborate to offer clients defeasance and cash-flow management, the firm announced Monday.
The team will be led by managing directors Jay Connelly in Chicago and Sam Gruer in New York.
Their team will structure, package and execute fixed-income portfolios to meet required cash flows, while working within their clients' investment parameters.
Gruer joined the firm in 2022 after a long career in the public finance arena. He has held a variety of roles in the defeasance space in principal, agent and consulting capacities.
"I am excited about the opportunities presented by leveraging Jay and his innovative approach to pricing; bringing my experiences, relationships, and expertise to this initiative; and the robust trading platform for which Mesirow is known," Gruer said. "The result will be meticulously crafted, cost-effective solutions for our clients."
A defeasance is used to retire outstanding bonds without a redemption or using an open market buyback. Cash is used to buy U.S. Treasury bonds or agency securities whose principal and interest are enough to meet the payments due on the outstanding bonds.
By using defeasance, a borrower can move debt or other liabilities off their balance sheets, Mesirow said, which can streamline the payment process — without prepayment fees — while mitigating interest rate volatility/risk. This is accomplished through the purchase of a structured portfolio, the firm said, that is made up of Treasuries and agency securities designed by the firm to deliver a precise and predetermined cash flow over time.
"For many years, Mesirow has been utilizing its strong and long-term relationships with clients to source and wholesale fixed-income securities to the street for defeasance purposes," Connelly said. "It is a natural progression to take the next step into becoming a direct provider."
Both teams are integral lines of business within Mesirow Capital Markets.
"We are excited to add defeasance services to our robust platform offering," said Todd Waldrop, head of public finance. "This effort reflects the collaborative, 'teams of experts' approach that differentiates Mesirow Capital Markets by bringing the whole of Mesirow to market to benefit our clients."
Mesirow is an independent, employee-owned financial services firm founded in 1937. It has its headquarters in Chicago, with various locations around the world.
