Louisiana city is first to take advantage of Stimulus Act program.
MEMPHIS, Tenn. (July 16, 2009) — Morgan Keegan & Company, Inc. led the underwriting effort for the $3.64 million sale of Recovery Zone Economic Development Bonds issued by Lafayette, La., the first municipal debt issuer to take advantage of this federally subsidized program, according to Buck Landry, managing director of the firm’s public finance offices in New Orleans and Baton Rouge.
“Lafayette was one of only two Louisiana cities to receive an allocation of the RZEDBs,” Landry said. “The program provided the opportunity to finance needed improvements for the city, including better streets, an upgraded drainage system and increased recreational areas. They took advantage of a unique program that will benefit its residents.”
Landry cited several factors that contributed to the appeal of the offering, including insurance against default by Assured Guaranty Corp., securitization of the debt through the city’s collection of sales tax revenue, and the city’s “AA” ratings upgrade from Standard & Poor’s.
Recovery Zone Economic Development Bonds (RZEDBs), the $10 billion federally subsidized borrowing program that permits local governments to sell taxable bonds instead of tax-exempt bonds, was created by the Stimulus Act of 2009 to aid areas of the U.S. hurt during the recession. The taxable securities are eligible for a 45 percent rebate on interest costs from the U.S. Treasury. The $3.64 million of RZEDBs sold by Lafayette represent the city’s allocated capacity from the federal government for this type of bond.
“The RZEDBs program allows issuers to offer investors attractive yields and, in the case of Lafayette, reduced risks provided by bond insurance and the city’s strong municipal credit,” said Lee Bressler, a managing director in Morgan Keegan’s New Orleans’ public finance office and head of the transaction’s underwriting team. “The successful completion of the offering was also helped by the firm’s distribution capabilities and by strong retail participation.”
The city’s offering also included the sale of $58 million of Build America Bonds (BABs), part of another stimulus initiative that allows state and local governments to sell taxable bonds instead of tax-exempt bonds and receive a 35 percent interest-cost rebate from the federal government. RZEDBs’ larger rebate, 45 percent, has led that program to be referred to as “Super BABs.”
In the first half of 2009, Morgan Keegan was the eighth largest municipal bond underwriter in the U.S., serving as book running manager on 262 issues with a par amount of $5 billion, according to Thomson Reuters, one of the leading municipal bond information services in the country. Additional rankings in the first-half of 2009 as municipal bond underwriter include:
- Ranked #1 In Louisiana, as senior manager of 22 issues with a par amount of $793 million;
- Ranked #1 in Tennessee, as senior manager of 32 issues with a par amount of $964 million;
- Ranked #1 in Alabama, as senior manager of 8 issues with a par amount of $260 million;
- Ranked #1 in Mississippi, as senior manager of 16 issues with a par amount of $280 million;
- Ranked #1 nationally as underwriter of Build America Bonds competitive issues, completing 15 transactions with a par amount of $369.6 million;
- Ranked #1 in the South Central region of the U.S., an area that includes AL, AR, KY, LA, MS, and TN, on 107 issues with a par amount of $2.8 billion;
- Ranked #1 in taxable competitive issues on 23 transactions with a par amount of $450 million;
- Ranked #2 as underwriter of bank qualified issues on 154 transactions with a par amount of $1.5 billion.
About Morgan Keegan & Company, Inc.
With more than 4,300 employees providing services in some 300 offices, Memphis, Tenn. based Morgan Keegan is one of the largest full-service brokerage and investment firms in the nation. The firm’s staff of more than 180 public finance professionals provides underwriting services through 28 banking offices in 14 states. Additional information about Morgan Keegan, the securities brokerage subsidiary of Regions Financial Corp. (NYSE:RF), can be found at www.morgankeegan.com.
About Regions
Regions Financial Corporation, with $142 billion in assets, is a member of the S&P 100 Index and one of the nation's largest full-service providers of consumer and commercial banking, trust, securities brokerage, mortgage and insurance products and services. Regions serves customers in 16 states across the South, Midwest and Texas, and through its subsidiary, Regions Bank, operates 1,900 banking offices and approximately 2,300 ATMs. Additional information about Regions and its full line of products and services can be found at www.regions.com.
Contact:
Melinda Rutland
901.531.3259
melinda.rutland@morgankeegan.com
