Opening Remarks: The Bond Buyer & Co-Chairs

Transcription:

Michael Ballinger (00:07):

Good Afternoon. I'm Michael Ballinger, publisher of the Bond Buyers. My pleasure to welcome you to our 28th Annual Texas Public Finance Conference. We have more than 475 registered attendees and we're particularly pleased we have over 90 issuers in attendance. This year's Texas Public Finance Conference will again address key issues and trends that are impacting Municipal and Texas bond markets. We're particularly pleased. I have such an outstanding lineup with keynote speakers including Aaron Jefferson, President and CEO of the Texas Economic Development Corporation, Glenn Hager, Texas Comp Controller, and Chris Hollins, Controller of the City of Houston. I'd like to take this opportunity to thank all of our sponsors and speakers for this conference, particularly our conference co-chairs, Noé Hinojosa, Jr, Chairman and President, and CEO of Estrada, Noosa Company, and Alejandro Olivo from Moody's Investor Service. I want to thank several Bombard employees who've done an outstanding job in this conference. Alma Subasic, our Program Manager, responsible for developing this excellent agenda along with our conference co-chairs and their teams at Moody and Estrada osa. I also want to thank Sarah Barringer, Megan O'Carroll, and Dan Hoskins who've handled all the marketing and conference logistics for the conference. Please join me in a round of applause for their efforts.

(01:26):

The Bombard editorial staff is also, well-represented this conference led by Lynne Funk, Rick Saskal and Karen Pierog. I urge you to reach out to our editorial and conference staff during the course of the conference. Kick off the conference. It's my pleasure to introduce our conference co-chairs. Noé Hinojosa, Jr is Chairman and President and CEO of Estrada Hinojosa company since co-founding Estrada Hinojosa in 1992, Noé Hinojosa been responsible for managing the firm's transactions and growth of the firm. He has built a strong reputation for creative solutions to complex challenges in the public finance arena. He has brought experience as a financial advisor to many diverse types of political subdivisions and municipality, as well as direct involvement in the firm's municipal bond underwriting activities.

(02:11):

Alejandro Olivo is the Managing Director of US Public Finance at Moody's. He is Co-Manager of the local government ratings in US and is based in Dallas. In that role, he manages the San Francisco, Dallas and Chicago based local government ratings team. Prior to his current role, he headed the Sovereign Risk Group for the Americas and Europe. He also managed the teams covering project finance infrastructure issues and across Latin America and Canada. Before I turn the conference over to our conference co-chairs, I hope to see many of you at the Bond Buyer Southeast Public Finance Conference in Hollywood, Florida on May 6th and 7th. So now join me in a warm welcome for Noe and Alejandro to kick off the conference

Noé Hinojosa, Jr (02:59):

For a minute. I thought Alejandro, we're going to flip a coin as to who's going to go first. It's great to see a lot of familiar faces and new faces. It's great time here. I was telling somebody earlier, this is the event of the year, I think as far as Texas is concerned, so, so hope you have some fun today and tomorrow and Wednesday. I know that Mike Ballinger gets up here and says, thanks to a lot of people, but I think it's fair to say thanks to. Where's Alma someone still here? She probably ran out of Austin already, but Alma works for the Bond Buyer. She helps us coordinate all the speakers and all the panelists. So she's always the one running with a chicken with a head cut off. So that's what we call it in Texas. So welcome to Texas. So again, Mike, thank you again for another successful Texas conference.

(03:51):

The 26th one for that matter, I believe. Is that what it was? What was that? The 26th conference? It's the 28th. Oh, the 28th. Great. I think I've only sponsored it about 26 times. I think you sponsor every one. I should get a discount by now. But anyway, that's besides the point and I'm glad everybody's laughing. I'm trying to chill everybody up and of course Moody's for putting up with us too. And I think in the days to come, we hope you find the topics informative and we hope that the panelists are just as enthusiastic as some of us are when we're out there attacking topics of the day. We titled this year's conference, bold insights for big Issues in Texas and beyond, and it's kind of funny, but everything that happens in Texas, we get to see it in other places, and that's what's so intriguing about being in a state that has a lot of activity in the municipal bond industry.

(04:47):

I just like to say that in Texas we do it a little better. Having been in the business for over 35 years, I can tell you we're part of building Texas. We were part of it, Bob Estrada and I back when we started with this company 32 years ago, and we continue to build it. And I think for some of you who are in this industry, just plain exciting to be part of a great state. Texas, as you all know, has grown significantly over the last three decades. And without our industry, many of our public projects that we now see and enjoy across our state could have not been achieved without people like yourselves in our municipal bond industry. Many years ago, Bob Estrada got me out of South Texas to come and work in Austin for then former US Senator John Tower, and none of these buildings were here.

(05:36):

I think the first thing we went out to lunch was that ironworks barbeque place that's still there, Bob. So it's fun to see Austin grow as much as it has grown. I said that last year to all of you who are part of the industry, you should stand proud of your efforts and become wiser so that you can better serve your clients and your state. You are part of an epicenter, economic epicenter of what moves Texas and beyond. Texas GDP in 23 was just shy of $2 billion larger than Canada, yet smaller than California by about 50%. So no longer ago our governor was telling us that Texas is expected to be in the next decade, probably the fifth largest economy in the country. For some of you who are practiced in Texas, whether it's practicing law or banking or whatever, you're in the right place.

(06:34):

This is the right place, and I think our next speaker is going to share with you some of that light. Today, Texas is home to more 500 fortune companies than any other state in the union, among the large cities that continue to have the best performing economically economic wise, city of Austin, number one in the country, and Dallas number eight. So again, Texas continues to be growing up, moving on forward of interest, and despite national municipal bond issuance dropping in the last three years, the Texas municipal issuance by all issuers was the largest in 23 with about $54 billion and followed by California with about 52 billion in New York with 42 billion. So Mike, we've exceeded New York and what that means, I know some legislators may be here from down the street. It's not that we're getting Texas into more debt, but it's the fact that investors are investing more in Texas than ever before.

(07:47):

People are bullish about Texas and thus when we see this kind of numbers, it just tells us the fact that Texas is kicking some butt for not saying something else that it's not appropriate among 500 people. But in any event, 23 was in years prior, like in 2020 and 21 has been a pretty test environment, interest rates rising, dealing with that inverted yield, curve inflation, supply chain issues, regulation. And now as some of you saw it this year, and probably next year, well actually in 23 and 25, an onslaught from legislatures in trying to put more unfunded mandates on our communities. So some of you not only have to do this for a living, you also have to be mindful what happens on the hill right here of Congress. So of note, I think the biggest challenges for Texas here in the next decade is going to be water.

(08:48):

I know we got people here from NatBank Water, wellboard sauce. So water I think is going to be a big issue. The electric grid still has yet to be resolved. I think I just heard the Lieutenant Governor making that a big push for the next legislative session. So there's a lot on that. And guess who can help 'em with that? This industry, transportation, highways, tall roads, navigational ports, that's something that we do best. So keep an eye, bring us ideas, bring ideas to clients. Certainly education charter schools continue to be at the edge of what's going on in Texas, so public education is on a tremendous pressure, but we expect to see more issuance on that. I think some of you keep track of bond elections year after year. We see more bond referendums being approved in Texas, but 85% is a passing average on elections.

(09:50):

But I stand to be corrected by some of the prominent bond buyers that are here. And last but not least, and it is become a pretty national agenda item, is border security and the economy. And I think if you're in Texas, you must recognize that Mexico continues to be our largest trading partner, and I think our next speakers will be sharing some of that light with you the next few days. I encourage you, like Mike says, to listen to Glenn Hager. Glenn is our biggest supporter of this conference. I think he's been doing at least 10 consecutive years for sure, with no pay. Yeah, always sharing his views. Sometimes very pessimistic on the budget and not on the economy, just the budget, especially when it comes to your budget. But other than that, Glenn, you'll learn a lot. I mean from Glen tomorrow, Aaron, of course, it's such an honor to have you here, Aaron.

(10:50):

I'm so excited to see you be the chairman of the new leader of the Texas Economic Development Council or Corporation. I know you just got back from the UK and India. Can't wait to catch up on those issues. And certainly I saw Phyllis Garcia out there and Vernon Lewis and Amy Perez from Harris County. Thank you for helping us out with this conference and so many more like Cindy Damir and Elizabeth Wright with DART and the Affiliate Airport. Some of you probably don't stay around until the last day. Please stay to the last day. We'll be talking about liquidity, the lack of or perceived lack of liquidity providers out there. That's an important topic for us. And of course climate change and how it is affecting our cities or communities for that matter. So when networking, I encourage you to meet them and share them your story and concerns in choosing.

(11:43):

In closing, I want to thank the Bond Buyer again, and most importantly, I do get to interview with clients all across the country with our firm. And you saw probably a notice last summer about Bob Estrada and I decided to go with our board, of course, decided to go with a new partner, Texas Regional Bank. I'm honored to have Michael Ski, our CEO and John Tippet, my new partners in this venture as a community bank out of Harlingen, Texas. That's where I'm from. Some of you're here from Harlingen, and I tell everybody, it's like being the salmon that left Rio Grande Valley one day went and created some crazy things for my partner Bob Estrada, and now we're going back home. And nothing like being with Michael and John and so many other people that out there with Texas Regional Bank, our staff right here in front of us, just tremendous people that make us look good. But we would not be who we are if fist out for many issuers like yourselves that gave a little bit of yourselves and put the trust in us. And for that, I thank you. So again, have a great conference, Mike, and thank you for being part of this. Alejandro, come on up.

Alejandro Olivo Villa (13:06):

Thank you. Thank you, Noé. Good morning. Hello everyone, and warm welcome to you all. My name is Alejandro Olivo. I'm a Managing Director and Co-Head of our local government activity at Moody's Ratings. Moody's ratings is our new brand name. I'm honored to be here with you today. As Moody's ratings continues, its partnership with the Bond Buyer at this prestigious Texas Public Finance conference. My gratitude goes out to Mike Ballinger and the whole team of the Bond Buyer and for their tireless efforts in orchestrating this event. I would also like to extend my appreciation to my co-chair, Noé Hinojosa and the entire team at the Estrada Hinojosa Company. Your dedication and hard work have been instrumental in making this year's event a reality. So thank you Noé, the success of this conference year after year, and we'll discuss discount later Mike is not just a result of meticulous planning, great speakers and an exceptional venue.

(14:09):

It is a testament to the vibrancy of the municipal market in the great state of Texas represented by each one of you, government officials, financial advisors, bond councils, accountants, analysts, investors, et cetera. I would also like to acknowledge the significant contributions of key market players such as the Municipal Advisory Council of Texas and organizations such as the Texas Women in Public Finance, the Government Finance Officers Association of Texas, the Texas Association of School Business Officials, the Texas Municipal League, and so many other organizations that have a positive impact in our state. Your leadership and commitment are the bedrock of a thriving financial ecosystem in Texas. Moody's ratings is privileged to be part of this dynamic ecosystem. Our association with the state of Texas dates back to the 1960s and our Dallas office operational for over 20 years continues to grow with about 25 rating analysts in the US public finance space, as well as in our project and infrastructure franchise.

(15:16):

We continue to invest in this dynamic market, expanding our local talent pool and deepening our roots in the community. I'm happy to announce that we now have a new managing director and US head for relationship management based out of Dallas Lloyd Pepper. If you have a chance to pass by our booth during the conference, any of our various Moodys colleagues joining me today would love to chat. More specifically, we would love you all to connect with Janice Hofferber, my boss and Head of the US Public Finance Group who's sitting here, as well as with Jira McGuire, the head of our Dallas offices and who you all know very well. And as mentioned also with Lloyd, our current portfolio in Texas includes close to 1200 ratings with rated debt of over $300 billion. This includes over 500 municipal utility districts and about 350 school districts making up a substantial portion of our public finance portfolio of about 15,000 issuers across the nation.

(16:20):

In terms of credit developments, Texas continues to show positive momentum to illustrate in 2023, Texas O upgrades exceed downgrades by a factor of 10 times, whereas in the US, while upgrades surpassed downgrades as well, the picture was much more mixed at around three times. And the pace doesn't seem to be slowing just yet with rating upgrades surpassing downgrades by close to four times as of March of this year. This is a significant achievement, especially considering that these rating actions have occurred predominantly at the higher end of the investment grade spectrum. Moodys continues to be a thought leader with regards to the Texas Municipal Utility district sector where we rate close to half of the over 1200 districts in the state. As we all know, over the past years, the state has seen incredible home value increases that remain overall positive. Higher taxable values have allowed for larger developer reimbursement and facilitated rapid declines in the debt burdens.

(17:25):

Those factors alongside solid state oversight and strong liquidity have resulted in close to 50% of the portfolio being upgraded since 2018. So we have an excited and exciting agenda lined up, featuring informative panel discussions on all the topics that occupy us, including the market outlook, technology, real estate, school, district, transportation, healthcare, you name it. We will also have a chance to listen from leaders such as Mr. Aaron Emerson, Bresident and CEO of the Texas Economic Development Corporation. And tomorrow's keynote speaker, Mr. Glenn Hagar, controller of the Great State of Texas. So I hope you are all as excited as I am to be here. Thank you again to the Bond Buyer and to the Estrada Hinojosa and Company for partnering with us. And with that now, it would be my great privilege to invite Mr. Arun Emerson, president and CEO of the Texas Economic Development Corporation to the floor. I will not go through his long and distinguished career encompassing various administration in Texas, various administration, state administrations in Texas. So without further ado, Mr. Emerson, please.