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Municipal Finance Conference

Agenda

Thursday
TIME PROGRAM
11:30pm-12:30pm

Conference Registration

12:30pm-12:45pm Opening Remarks
Daniel Bergstresser, BRANDEIS INTERNATIONAL BUSINESS SCHOOL
12:45pm-2:15pm

Paper session: Ratings and Credit Risk
Moderator: Kurt Forsgren, STANDARD & POOR'S RATINGS SERVICES

Do Credit Ratings have a Home Bias?
Jess Cornaggia, UNIVERSITY OF INDIANA
Kimberly Cornaggia, GEORGETOWN UNIVERSITY
Ryan Dwight Israelsen, INDIANA UNIVERSITY

Bankruptcy Risk Premium in the Municipal Securities Market 
Tima Moldogaziev, UNIVERSITY OF GEORGIA
Sharon Kioko, SYRACUSE UNIVERSITY
Bart Hildreth, GEORGIA STATE UNIVERSITY

Direct Bank Investment in Municipal Debt
Daniel Bergstresser, BRANDEIS INTERNATIONAL BUSINESS SCHOOL
Peter Orr, INTUITIVE ANALYTICS

2:15pm-2:30pm Break
2:30pm-4:00pm

Paper Session (Buy Side Dynamics)
Moderator: Michael Stanton

Municipal Bond Performance in a Rising Rate Environment 
Miles Barnett, MUNICIPAL MARKET ADVISORS

The Structure of Demand for Tax-Exempt Securities: Past, Present, and Future 
George Friedlander, CITIGROUP INC.

4:00pm-4:15pm Break
4:15pm-5:45pm

Parallel Paper Sessions

Session A: Issuer Policy
Moderator: Mark Robbins

Determinants of Debt Concentration at the State Level
Robert Greer, UNIVERSITY OF GEORGIA
Dwight Denison, UNIVERSITY OF KENTUCKY

The Role of Tax-Exempt Debt in Financing Nonprofit Institutions of Higher Education
Todd Ely, UNIVERSITY OF COLORADO
Thad Calabrese, NEW YORK UNIVERSITY

The Effects of Political Competition on the Funding and Generosity of Public-Sector Pension Plans
Sutirtha Bagchi, UNIVERSITY OF MICHIGAN

Session B: Issuer Tactics and Strategy
Moderator: Michael Baumrin

Asset-liability matching in the State and Local Sector
Daniel Bergstresser, BRANDEIS INTERNATIONAL BUSINESS SCHOOL
Colin MacNaught, COMMONWEALTH OF MASSACHUSETTS

Financial Innovations and Issuer Sophistication in the Municipal Securities Markets
Stephan Whitaker, FEDERAL RESERVE BANK OF CLEVELAND

Towards a Better Policy: Analyzing municipal refundings using a real-world market model
Peter Orr, INTUITIVE ANALYTICS
David De La Nuez, INTUITIVE ANALYTICS

5:45pm-6:30pm Networking and Cocktails
6:30pm-8:30pm

Dinner panel: What can history tell us about the future of sovereign and sub-sovereign default?
Jim Spiotto, CHAPMAN STRATEGIC ADVISORS LLC
Mark Berman, NIXON PEABODY LLP

Friday

TIME PROGRAM
7:30am-8:45am

Idea Generation breakfast
Moderator: Colin MacNaught, THE COMMONWEALTH OF MASSACHUSETTS

8:45am-9:00am Break
9:00am-10:30am

Parallel Paper Sessions

Session A: Taxes and Muni Market Dynamics
Moderator: Roy Eappen

Optimum Tax Management of Municipal Bonds
Andy Kalotay, Ph.D., ANDREW KALOTAY ASSOCIATES INC.

Tax-efficient Issuance and Trading of Tax-exempt bonds 
Mattia Landoni, SOUTHERN METHODIST UNIVERSITY

The Challenge of Measuring the Revenue Cost of the Tax Exemption

Session B: Market Microstructure
Moderator: Dave Abel

Timely Disclosure and Transactions Costs: Evidence from the Municipal Bond Market
John Chalmers, UNIVERSITY OF OREGON
Steve Liu, UNIVERSITY OF OREGON
Jay Wang, UNIVERSITY OF OREGON

A Comparables-Valuation Model for Municipal Securities
Justin Marlowe, UNIVERSITY OF WASHINGTON
Evan Bergstrom, TRIANGLE PARK CAPITAL MARKETS DATA
Ron Valnotti, TRIANGLE PARK CAPITAL MARKETS DATA

Integrating Big Data, Neuroeconomics, and Learning Networks to Model the US Municipal Bond Term Structure
Gordon Dash, UNIVERSITY OF RHODE ISLAND
Nina Kajiji, UNIVERSITY OF RHODE ISLAND
Domenic Vonella, UNIVERSITY OF RHODE ISLAND

Bond Term Structure

10:30am-10:45am Break
10:45am-12:00pm

Roundtable: New Developments in the Municipal Marketplace

12:00pm-12:15pm Break
12:15pm-1:30pm

Lunch and Keynote Address
Michael Piwowar, Commissioner, U.S. SECURITIES AND EXCHANGE COMMISSION (SEC)

1:30pm Conference Adjourns

Proposed Research Project — Municipal Swaps

Hypothesis: The use of 20-year or 30-year interest rate swaps in the municipal securities market may be exceptional in the financial markets and may pose substantial risks for municipal securities issuers that would not be presented by shorter term swaps. This proposal calls for research regarding the validity or lack of validity of the Hypothesis.

The methodology would involve research regarding the use of interest rate swaps in financial markets other than the municipal securities market, the contexts and purposes of those swaps, a comparison with practices in the municipal market, and a consideration of risks posed to municipal securities issuers by use of 20-year or 30-year swap terms. In addition, the methodology would critique common assumptions by which interest savings are estimated or projected for municipal issuers.

Interest rate swaps are used commonly in the municipal securities market as a means of hedging the interest rate risks of variable rate obligations so as to achieve synthetic fixed rates lower than fixed rates prevailing in the market. The terms of the swaps generally match the initial terms of the variable rate obligations. During 20- to 30-year lives for which the swaps are structured to exist, many dramatic economic, political, market and other occurrences may require early swap terminations at substantial costs to state and local governments. In addition, it is not uncommon that issuers may wish to change interest rate modes on variable rate obligations, so that the original swap structures no longer may be appropriate for achievement of the estimated or projected issuer savings. The issuers also may wish to re-structure or refinance and redeem the variable rate obligations. Further, bond insurers that are required to enhance issuer ratings for the issuers’ payment obligations pursuant to the swaps may be downgraded. Historically, each of those events have led to swap terminations and associated costly issuer swap termination fees.

The research would be expected to form a foundation for policy considerations regarding the suitability and fairness of the use of long-term swaps, and regarding the fiduciary duties of advisors, and fair dealing standards applicable to swap dealers and advisors, who recommend them to issuers. In addition, issuers may use the research in their own evaluations of swap proposals. 

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