Wisconsin plans to establish new underwriting pools after reviewing responses to a request for qualifications process this month, with its eye on expanding existing pools as it heads into next year.
The current investment banking pools expire Dec. 31. The state chooses from among 20 in the qualified senior pool and 25 in its co-manager pool for negotiated transactions.
“The state is excited to review qualifications of firms that it has worked with, and those of new and other firms the state has not yet worked with,” said Capital Finance Director David Erdman. “The state is hoping to expand the number of firms in the current pools.”
The qualification review for investment banking services is an open process. The initial submittals for the
The Wisconsin Building Commission — which authorizes state debt issuance — seeks to use minority investment firms on at least 6% of the state’s obligations and has a policy to promote disabled veteran-owned investment firms. “In a negotiated sale, the state will use best efforts to address these policies,” the RFQ reads.
The RFQ asks that firms lay out their quantitative skills and recommendations relating to macro matters on disclosure, ESG, and developments related to the COVID-19 pandemic.
“The current COVID-19 pandemic has impacted all participants in the municipal bond market … based on current events, what changes are expected from your firm with respect to how it ‘covers’ the municipal marketplace … are there other operational changes at your firm, or expected operational changes, that will impact the focus of public finance or municipal bonds at your firm?” the RFQ asks.
“Environmental, Social, and Corporate Governance (ESG) designations are becoming more prevalent in the municipal marketplace. Please discuss any initiatives or administrative changes the state should consider related to this topic — including, but not limited to general disclosure, certifications, and proper identification of specific projects within future issuances that may promote the ESG designation, allow for expanded investor interest, and meet disclosure expectations,” the RFQ asks.
The state is also asking bankers to weigh in on the upcoming fiscal 2022-23 biennial budget that Gov. Tony Evers will present to the legislature in February. “Please identify and discuss one bonding-related initiative that the state should review for possible inclusion in the” budget, the RFQ asks.
The Wisconsin Policy Forum reviewed the projections and agency requests and warned in a review published this week that the state faces its most daunting challenges since 2011. After including routine adjustments for debt payments and employee compensation, but excluding new spending requests by state agencies, the group warned of a $373 million gap. That figure didn’t include projected growth of $1.1 billion in Medicaid health programs or other new spending on education, prisons, or the pandemic response.
“New spending in at least some of these areas appears inevitable, particularly in the case of Medicaid, and will add to the challenge substantially,” the forum review warned.
The state is on course to close out the current fiscal year with a $1.2 billion general fund balance and, if the numbers hold, that would result in a $13 million deposit into the rainy day fund, known as the budget stabilization fund. The rainy day fund hit a peak of $762 million at the end of fiscal 2020 on June 30 after a $105 million deposit.
