New York State Dormitory Authority
Employer Assessment Revenue Bonds, 2013, Series A
DASNY Workers Compensation deal is huge success for the State of New York
This was the second transaction in 2013 senior managed by SBS for the New York State Dormitory Authority. This transaction financed the purchase of Assumption of Liability policies by the State’s Workers’ Compensation Board (“WCB”), a new program created by the legislature in 2013. Our firm provided DASNY and the WCB with a broad array of services for this complex financing including assistance in the development of the rating agency presentation, the bond disclosure document, and extensive financial modeling.
Unlike the previous WCB financing, this December 2013 transaction combined all individual WCB assessment streams into a new single “unified assessment” that is now the direct responsibility of employers statewide (versus the prior assessment streams which were primarily the responsibility of insurance carriers). Siebert Brandford Shank worked closely with DASNY, WCB and the rest of the working group to prepare a rating agency presentation and credit strategy designed to generate maximum benefit for these new programmatic features. The transaction was ultimately awarded Aaa/AAA/AAA ratings from Moody’s, S&P and Fitch, which led to the lowest possible overall cost of capital. SBS also created a cashflow coverage model that allowed us to demonstrate to the rating agencies the estimated resultant coverage assuming the entire legislatively authorized borrowing amount was issued over time.
The AAA ratings proved to be highly attractive in the marketplace for this taxable financing. The $1.3 billion order book was considerably diverse, with over 100 orders from over 30 institutional investors comprised of a broad array of investor types, including insurance companies, mutual fund companies, and money managers. As a result of the significant orders received, SBS tightened spreads to US Treasuries by 5 basis points in the 2016, 2017 and 2034 maturities. These adjustments were in addition to a 5-basis point tightening in these maturities made prior to the original indication of interest order period, resulting in a total adjustment of 10 basis points in those maturities and a very successful pricing overall.