Transcription:
Michael Scarchilli (
All right, so this panel here we have three of this year's Class of Rising Stars supposed to be four, but unfortunately one of our panelists had some travel issues and was not able to make it. But we have three excellent rising stars here for this opening panel, and we are going to start by getting to know them a little bit better. So why do not we go down the line and have you all introduce yourselves and just tell us how you got your start in Muni finance business.
Abhishek Lodha (
I can kick it off. Hi everyone. Abhishek Lodha here. I am a vice president at a Assured Guaranty. I had a bit of a unconventional start to munis just like I am sure a lot of people, but I came from India in 2013 to do my grad school. I had a mechanical engineering background. I used to run a social startup with laborers out of Asia's largest slum to build art from scrap metal and then sell it to large corporations. So perfect fit with Munis, I guess and I came here to do my degree in operations research and that is when I first interned in Munis. And it was quite fascinating that coming from India where we constantly complained about infrastructure needs and corruption and issues that we have. And out here you see a really large and complex market which funds infrastructure and all these public projects.
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It was quite fascinating and that kind of led my journey towards Munis. And when I joined full-time at a financial advisory firm doing credit research the second problem that I noticed was this the complexity led to fragmentation as well. So as a research analyst, how do you deal with fragmentation of information? How do I scale myself and be a better analyst rather than just being a data wrangler? So that kind of led to my journey towards being in the product development and FinTech space. So I started off with building a credit analytics application along with Bloomberg for Muni financial analysts. Went on to an ESG RIA where I became a research analyst, a trader and then a portfolio, a product manager, I am sorry where I built out their entire front office tools and helped finance broadband projects as well. So that was quite fascinating. And now I have been at a short for three years where I am VP of product development.
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So a lot of my focus is towards we make this running joke internally, how do we build Ironman suits for our credit analysts so that they are better at what they do, or rather can focus on what is the most important thing, which is focusing on credit and analysis. So I have built out a bunch of different applications and platforms for our teams. We think of new business ideas for at a short guarantee, and I lead a lot of their ESG strategies as well. So climate risk being such a big focus right now, and we are risk takers. How do we better evaluate communities both from a risk and a mitigation standpoint? So I have been running data science groups and building out technologies to help us and others in the market scale better.
Anne Tricerri (
Hi, I am Anne Tricerri. I am a director in the infrastructure and project finance group at Fitch Ratings and I also head the US towards sector. I entered the municipal finance sector when I joined Fitch and I have been here for about five years. Prior to joining fit, I have done a variety of different things in my career. Most recently I was working in investment banking, but I was covering a different sector. I was covering business services and technology companies and I did not see myself doing that long term. So I came across the opening at Fitch. I have always loved infrastructure. I majored in chemical engineering undergrad and I probably should have majored in civil engineering in hindsight. But I decided that I really want to follow my passion and what I am genuinely interested in. And I can tell you that covering tow roads mostly at Fitch, I actually enjoy reading 200 page traffic and revenue consultant studies so it is just been a great fit.
Nicole Riggs (
Hi, good morning. My name is Nicole Riggs. I am not an engineer.
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I am a vice president at MUFG Union Bank. We provide a full suite of lending and banking services to state and local governments and not for profit clients. I have been with the bank for almost eight years actually. And while my fellow panelists have made their way to infrastructure to public finance I have my whole career have been at least adjacent to the public finance business. Prior to joining the bank, I worked for the Port Authority of New York and New Jersey. For seven years, I was mostly in the aviation department, but my seven years there was very formative in terms of developing my further interest in public finance. I am sure most of you are aware of the different facilities that the Port Authority runs the airports, the bridges and tunnels the path train, the ports up there. And I started at the Port Authority right out of graduate school.
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I participated in a rotational management training program, which was just instrumental in helping me understand all of the different types of physical infrastructure and the different ways that we can finance it. I got to know a lot of different people in the industry and really understood, particularly in the New York metro area, just how critical all of that infrastructure was to the economy and to the functioning of the society. I spent most of my time in the aviation department working with the operating budgets for the airports with the multi-billion dollar capital program and it really was just a good match for my educational background. Like you mentioned at the top, I am not an engineer like my fellow panelists but I got my degree in public policy and urban and regional planning. When I was in graduate school, I tended to be surrounded by people who had amazing ideas, but was not a whole lot of discussion as far as how we were going to pay for it. And I thought that was a niche that I could help fill and that was one of the things that really drove me to joining the Port Authority and I am excited to be here and discuss infrastructure over the next couple of days with everyone.
Michael Scarchilli (
All right, thanks everyone. So now I want to ask a two part question to illuminate some of your individual experiences thus far in your career. So we will go down the line again. What would you say the biggest highlight of your career has been to date and also the biggest challenge that you faced?
Abhishek Lodha (
If this was an interview question, I would totally bomb it. So I do not think I have had one single experience, which defines to be the biggest highlight for me. What fascinated me was I was able to do so many different things throughout the like I am still learning hence the Rising Star, but it is so many aspects to the market to begin with. There is so many different firms that are out there and so many roles to place. And I have managed to tinker around with a fuse and that is been a big learning experience of mine which is also a challenge because I took up this FinTech path, which is quite nontraditional in our space and there are not a lot of players in that. So as I was building my career and my career path a lot of mentors helped me throughout my career, but it was up to me to learn a lot about the market as well.
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So I think that was one of my biggest highlights is really being able to play so many roles from product to trading to credit analyst. ESG is this new thing that it is not exactly new, but I know we are talking a lot more about it. So how do we get more cohesive thinking and structure around this aspect of the market is something I have spent a lot of time in the last couple of years. So that is been quite fascinating from a challenge perspective. I would say the learning curve as I mentioned. But the second is persuading people within our market on what the role of technology should be. And it is a lot of times people and I keep trying to have this battle wherever I go, is technology is not, it is an enabler, not a replacer. And we are in a market where we have 50,000 issuers versus 5,000 in corporate markets.
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So there is a lot more fragmentation, there is a lot more information. So as you are sourcing and analyzing deals and identifying opportunities to invest in, how do you do that in a more systematic way or methodical way? And that is really convincing people towards how technology can help you analyze better or invest in the right areas that align with your investment there is somewhat of a challenge, but I think things have changed a lot in the last three years, especially with the pandemic, especially with the idea that we are all going to be remote and how do we work together in a more efficient manner. It is seen a big change. And it is funny because I still remember the very first conference I attended when I joined New York the first financial advisory firm I worked for and someone said, Hey, there is been such a big technological change in our market now we can control F into PDFs and search for keywords. And that just blew my mind coming from an engineering background. And I think we have definitely come a long way in how companies use data, how data access has become more democratized. So yeah, it is a fun journey right now.
Anne Tricerri (
Well, I have to say that being a bond buyer, rising star is definitely a highlight in my career. But more broadly, I think my time at Fitch has just been a wonderful experience and I have had so many opportunities to speak at conferences, write research, meet all different kinds of issuers and I really like having that third party role where you get to see all the different perspectives and have an independent point of view. But I think it was a challenge figuring out what I wanted to do with my life. As I was mentioning, I have done a variety of different things in my career. After I got my bachelor's of science in chemical engineering, I did energy consulting for a few years, I decided to get my MBA and go into finance and I was working in a different sector business and technology and I liked it, but it did not feel like the right fit. And I also did not see myself doing investment banking long term. I am sure many of you in the audience understand that the longer you do it, the nature of your role changes over time. And I really liked the analytical aspect of the job. So I knew that I could not keep switching careers. So we are all under 40, right?
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So you reach a point where you got to figure it out. And I had always been very passionate about infrastructure, so I just started networking and I really tried to be thoughtful about my next move. And I luckily found out about the opening of Fitch. I interviewed with the team and it was really great but since I did not have experience directly in municipal bonds, I did have to learn the industry pretty quickly. But definitely having a background in corporate finance and understanding those fundamentals made it a lot easier. And I love infrastructure, I love all kinds of infrastructure. One of my hobbies actually is looking at all different kinds of abandoned infrastructure cuz I also like to see why infrastructure went wrong, but I am just genuinely fascinated by it and it is a lot easier to be successful when you really enjoy what you are doing.
Nicole Riggs (
I would categorize the highlights of my career. I think they fall into two buckets. So first is the cheap thrills of just being an infrastructure nerd and getting to climb to the top of the George Washington Bridge or stand out on a runway at JFK airport when they are reconstructing it and seeing the 18 inches of concrete and just getting so excited about these things that very few people outside of this room get excited about. But when I think about my career, and this is not specific to public finance, but when I think about what the highlights are I have really enjoyed mentoring younger people particularly women or underrepresented minorities. I am involved with our recruiting for our summer analyst programs, and I love going out and talking to students and getting them excited about not just a career in public finance, but finance generally and what we can do, how we can change the industry.
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So I would say that that type of mentorship and advocacy is really a highlight of my career. I think it was about two years ago, I am pretty proud that I managed to convince a Japanese bank to partner with a program called seo, which a lot of people probably know in the New York area focused on diversifying not only finance, but other sectors including real estate alternative investments and manage to convince our management to enter into an official partnership with the organization. And that is just something that gets me excited. I just enjoy speaking with other young people and helping them develop their careers even though mine is still under development as well. As far as challenges, like I mentioned I left government to join the bank about eight years ago, and I knew I was going to have to learn a completely different business. So I was going to learn what about banking products that I maybe had never heard of.
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I had to brush up on my sales skills, but what I did not anticipate was that functioning within the organization was going to be much more of a challenge. The Port Authority is singularly focused on transportation. Everybody is rowing in the same direction. You do not have to explain why the airports are important or their projects or the revenues that they generate. Whereas at the bank, the public finance business line is one of dozens and it is often considered niche. It is different from corporate finance. There is a lot of sometimes education or advocacy that needs to happen as we are competing for scarce resources for scarce capital. So the challenge was how do you position the business within an environment like this? And my approach has been one of continuous learning so building relationships across the enterprise not just within my own silo so that if I have a question, I know who to call and that person's gonna take my call.
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Being keeping abreast of industry trends both within the banking sector as well as more specifically to public finance just really understanding and developing that credibility and then also staying aware of regulatory imperatives. We all know that more and more regulations drive resource allocation decisions. So I was constantly collecting all of these inputs to help my team frame the way that our business opportunities align with the strategic goals of the bank. And I think figuring out these shifting contexts is a continual challenge, and that is turned out to be much more difficult than just learning the products and learning the business.
Michael Scarchilli (
All right. So now let us move our focus outward a little bit into some of your outlooks on the industry. So we will go down the line again just from your perspective as rising leaders in your respective areas of the industry what would you say is the biggest issue that the industry faces or the thing that will loom the largest over the short and the long term?
Abhishek Lodha (
So I do not know if it is for an infrastructure conference, but I will try to move again towards the technology side of things. Number one what we are seeing, especially in this market, is with the squeezing of fees that is happening on the asset manager side. And with the SMA movement, there is a lot more that, and I will use what Nicole said, everyone is trying to figure out how to do more with less and it is become a huge challenge. And we are seeing a lot more firms have probably spoken to 150 firms in the last year and everyone is trying to figure out how to better build their teams within this hybrid work environment to scale up their operations. And I see a lot more big data and online electronic execution that is happening and moving towards esg, which has also been a new aspect or a much more defined yet undefined aspect of our industry, which has led to just technology becoming more and more important in the ESG space.
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Firstly, I think I have come to dislike that word because it is so bastardized in so many different ways but there is a lot you are seeing on the risk side, right? So with climate one in 100 year events happening five times in the last decade or two decades, it is been more and more frequent. And with the recent hurricanes that we have seen people are now shifting their focus on how can they better manage and understand communities as well as mitigation and adaptation efforts that are happening. We keep talking about there is no green and price differential in the market and mean, at least my opinion, that is just a function of state and federal funding flowing in or assistance flowing in so far, right? With NFIP changing or looking to change its rules with fema, rethinking insurance, what does that mean for the market is gonna be a big lift as we are thinking of what does this mean for rebuilding certain communities.
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So I am looking at it closely, especially as a short guarantee and being long-term risk takers. So that is gonna be a huge shift in the market. We are also seeing a lot more ESG funds. I know in some ways there are a lot of firms who market it, but they are not very ESG friendly. So with greenwash in place and the regulators coming around now trying to justify or asking asset managers to be able to defend their methodologies, we see a lot of movement out there as well where again, it rolls into technology and data and how do you do it in a more objective way? So I see a lot of shift that is happening at multiple levels out there.
Anne Tricerri (
I would say that we are at a pivotal point in the infrastructure world. Present Biden is called a transition and it really, it is happening. We have seen that car manufacturers are focusing on electric vehicles. States such as California are planning to phase out the sale of internal combustion engine cars over the next decade or so, and this is gonna have ramifications that are not immediately obvious to people who are not in the industry. We have always had a problem with the gas tax, it does not generate enough but what happens when we have electric vehicles? Well, that essentially goes out the window. So we have to come up with new ways to adapt to this technology road user charging, for example. And how are municipalities, how are to road authorities going to handle that? How are they going to figure out how to work with other municipalities to divide up those charges?
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What if you drive across the country, how is that gonna work? There are a lot of challenges that require sophisticated technology and software to make it work. So I think that is very important for the industry. And also it is the age old problem that we have always had is how are we gonna pay for this? And it is definitely encouraging that the infrastructure bill has made a lot of grant money available that makes it a lot easier for a lot of different entities to rebuild their aging info infrastructure. But really all over the country, we have been hearing for years and years that we get a D in infrastructure in the us but we are also at this point where there is demand for non-traditional assets like broadband and carbon capture facilities. So we have to figure out how are we gonna fund the new and how are we also gonna preserve the old?
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And we have seen that different states are embracing P three s a little bit more. It is a little bit of a challenge in the us but definitely the increase in the PS allotment is very helpful in terms of leveraging private sector investment. But we have seen with the Pennsylvania Bridges P three project, those bridges need to be fixed and they are in rural areas. It is not easy to figure out how to do that. And doing an availability pay project has been a way to spread out the cost of that for the state. So I think that we need to be open to all different ways of funding working together with the private sector, take advantage of all the funds have become available. And in the theme of what we are all seeing here think outside the box be innovative, and try and harness technology wherever you can.
Nicole Riggs (
So if I was to ask everyone, how did you get here today? I would expect to hear some fairly similar responses. I flew into DCA or as my boss accidentally flew into dolls, but that is another story, I took the Amtrak, I drove the interstate highway. There are a number of ways that people arrived here today, but when I think about how I got here today, I am a new mom. I am here because I have great childcare, that is how I have a one year old, and I am able to continue with this career that we all enjoy because I have amazing caregivers for her. And so it may be salient bias, but when I think about one of the biggest challenges facing not only our industry, but the economy as a whole, I think about soft infrastructure. And I know that the soft infrastructure piece did not really come up in the opening address and that is not really what we are here to discuss over the next two days. But I would argue that soft infrastructure, especially when it comes to childcare and elder care there is a critical need to improve that in order to keep our economy going especially in this tight labor market that we are seeing. And while I think Ann's comments are the perfect foil for how I will close out I do not dispute that our physical infrastructure that there is huge need and it is not in great shape. And I would also argue that there are some unique challenges when it comes to the soft infrastructure.
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I think the first is that it is just less visible. We see the bridges collapse, we see, we feel the potholes in the roads, we see the roof leaks in the bus terminals, but what we do not see our individual families struggling with childcare, we do not see that compared to pre pandemic. There are a hundred thousand fewer childcare workers in this country. And if you say, okay, each of those workers takes care of an average of five children, that is possibly half a million children that do not have care available to them and someone is got to take care of the kids. The second challenge I think, is we have for soft infrastructure, like childcare, elder care, we have fewer frameworks for designing, implementing and financing kind of successful the infrastructure that we need to have these robust child and elder care networks and brought up the gas tax, everyone in here knows what the gas tax is.
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If I were to say Debo, everybody knows what that stands for, but we do not have as readily available frameworks for improving our soft infrastructure. So I am optimistic that we've started talking about things like more universal childcare, parental leave, when we talk about infrastructure, it did not make it in, most of it did not make it into the final bill most recently, but at least we are starting to talk about it. But again, I think that it is critically important not only for our industry, but for the economy when we have such a tight labor market to be able to have access to all the talent that is available.
Abhishek Lodha (
Can I, I am sorry. I think what both Anne and Nicole mentioned is absolutely important. And one of the things at Assure we were recently working on was social equity. We spoke about resource allocation and optimal resource allocation. We speak a lot about data and tech, and you have so many issuers trying to address those problems through the lens of, okay, we know what the infrastructure needs may be, but through the lens of social equity sometimes challenging to quantify and harness. We worked with a social startup recently which is a lot in the tech space, and one of their clients is pg e, where pg e Historically with everything that is happened around in California they were very focused on their plants and substations across the country and identify and allocate dollars based on age of land. And now suddenly with more information available to them, they are not just thinking in terms of age of plant, but also rank stacking their substations by which communities are they serving?
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Because the effect of a station to go down may be different based on which community you are serving. So for a rich neighborhood, it may be I am running, I do not have air conditioning, but in a poor neighborhood it may mean no access to breathing machines anymore. And through that lens, they are now able to rank stack in a more optimal way on where infrastructure needs need to go. And I think as we're speaking about this, it is fascinating what's happening in this 400 billion govtech space as well, where you have a lot of these startups providing this kind of information at a local level because these challenges and problems are also at a local level. And talking about industry outlook, I think that is going to feed into the public finance market in many shapes and forms. So I am really very excited about that.
Michael Scarchilli (
All right, great points everyone. I think we wanna save a little bit of time for questions from the audience, so if anybody has any questions think about them and we'll go around save some time for that in the interim. I have one more for everybody down the line just talking a bit about the pandemic. So in this of post pandemic return to office, as things have changed and shift from where things were I am interested, how have you all seen that play out in your respective areas of the business and where do you think that is going?
Abhishek Lodha (
I think yeah, hybrid is definitely here to stay. I think we all have come to agreement and it is great to be in the office again when we were starting these new business ideas that we are working on right now, it was really hard to collaborate. So now that we are back in the office, it is phenomenal. We are two days a week right now. We are gonna be three days next year, I think. And it is helped build up teams a lot better. Talking about young talent, I think I onboarded three junior analysts during the pandemic, and it was a challenge as a challenging experience for me on how do we get them involved, get them up the learning curve, and really build that morale and velocity as a team. So it is good to be back again I think rolling into the hybrid and the supply demand and dynamics of the labor market right now.
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And I am trying to remember, it was at the California Bond buyer conference where I think it was Gary Hall who made this comment that there is a silver tsunami in our market, so it is really hard to get young talent. And how do you do that in a remote work environment? I think it will be keeping that hybrid and remote environment would be good because you can go to people where they are in terms of jobs. So I see a lot of benefits out there but at the same time, we're all gonna, I think, figure out slowly those challenges of how do you maintain productivity as well as get teams to be more compatible and coordinated.
Anne Tricerri (
Well, I mostly cover tours and we have seen the hybrid effect has definitely manifested in terms of traffic numbers. Overall, the Touro sector was very resilient in terms of ratings. We did not have any downgrades as a result of the pandemic specifically. We had a few negative outlooks, but overall the sector was really stable because the finances are very well managed in terms of maintaining a lot of liquidity and generally their investment grade. But there have been longer term trends that we have seen. And in passenger traffic, it is still a few percentage points below the pre pandemic level in 2019. On the other side, we have seen commercial traffic has rebounded and continues to grow. So it is a little bit of a different traffic mix and that is okay from a revenue standpoint but it does show that the pandemic has had a lasting effect compared to the pre pandemic trends.
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And many towards, especially I am from New York so the northeast this especially is a factor but a lot of toll roads transfer money to transit transfer surplus and tow roads because they are resilient. They usually have the ability to transfer out that excess and still remain very strong financially. But in terms of pandemic, it, it is been a crisis for transit in New York where on the subway we were around 60% of pre pandemic for a very long time. Now it is getting a little bit better towards 70% but the fair box was never enough to pay for transit to begin with. And now we have that step change in all that fair revenue that we are losing. And this is happening all across the country, that people have not returned to transit for various reasons, some of which is the telecommuting effect with the hybrid working. So it exacerbates the problem of how are refunding transit, and there is a lot of pushback against toll roads in the industry.
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There is concern, environmental concerns equity concerns. People generally say, oh, well build transit instead but we also have to be realistic on what people want to do. You know, could build a lot of transit, but if people are not using it, then is that really the best decision? So I think we have to be innovative, and I think we also need to, not necessarily, this might sound a little charged, and obviously I love toll, so, you have to consider who it is coming from, but I think we need to not necessarily demonize toward and see them as an important part of the transportation mix, and they can work hand in hand with transit.
Nicole Riggs (
So I would agree with my fellow panelists. I think that hybrid work is here to stay, and it is something that the different sectors of our entire economy needs to adapt to. I think that our generation is a good, I have always thought of myself as part of a bridge generation. I grew up without the internet. The internet started coming into homes when I was in high school at that time, Amazon was a website that you could use to develop your annotated bibliography for a research paper without actually going to the library. But I think Aek was talking about onboarding new staff. I think that we as kind of middle managers have a critical role to play in helping the industry figure out how we adapt to this changing work style. Because again, we are not part of the silver tsunami. We are going to be here, we are gonna have to live and however we help shape it.
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But I think we do have a critical role to play in terms of helping not only young talent come in and start to develop their careers, but also providing guidance to our senior managers who for 30, 40 years they have done the exact same thing. They have come into the office every single day and help think about ways that we can all adapt so that we can be successful together. Because the reality is, I think going forward, it is gonna be two or three or four days in the office and there are ways to do it. And I think it relies on again, valuing the diversity of experiences recognizing that it is going to be harder on some personalities than on others. I recently had lunch with a now former colleague, but he was based in Los Angeles. I am based in New York, and we probably talked on the phone, I dont know, five, six, seven times a day.
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And when we had lunch, as he was leaving, he made a comment like that is funny. This is only the second or third time that I have ever seen you in person. And I thought to myself really like it. I feel like I might as well have been working in the cubicle next to him. So I think there are ways and I think we all need to put our heads together and be intentional about developing ways to make this new hybrid reality work because it is not just going to happen. I think we need to be active participants in thinking about what kind of workplace that we want, what kind of workplace is productive not only for our respective firms, but also for us as individuals.
Michael Scarchilli (
Right. Very true. All right, thanks everyone. So I would like to open it up to audience questions now. Does anybody have any questions for any of our panelists up here? All right. I do not think I see any hands, but I have these two blinding lights in my eyes, so I can not be totally certain. So I think we are out of time anyway, so nobody has any questions. We can just wrap things up here. So yes, thanks very much to all of our panelists and congratulations to all of you and to all of the rising stars out there. Now. We will have our morning break across the hall and enjoy the rest of the conference. Thanks everyone.