Detroit Has New Financial Advisor As It Rebuilds Bond Market Access

By Nora Colomer

THE BOND BUYER (Published May 10, 2019) – Detroit has hired Public Resources Advisory Group Inc. to replace Hilltop Securities Inc. as financial advisor as the city continues to push its return to the bond market.

Dave Massaron, Detroit’s chief financial officer, says PRAG will work with the city to build more robust investor relations and on the city’s outreach to rating agencies and its strategy as it looks to build out its debt model.

Massaron said the advisor switch was part of a standard request for proposals process that began before he took over as CFO. Massaron, who was acting as the city’s interim CFO since the start of the year, was confirmed as CFO by city council in April.

“We have successfully accessed the market on our own credit, so this is the next step, to make the process over how we access the market and relate to investors that much more robust,” Massaron said.

The city accessed the bond market on its own credit at the end of last year with a $135 million junk-rated deal. The new money unlimited tax general obligation bonds are part of $225 million in tax-exempt borrowing the city council has authorized. The remaining bonds are projected to be issued in 2021.

Massaron said the city will work with PRAG on future bond issues to support the city’s ongoing capital needs and better define the city’s capacity to borrow over the long-term.

“The city has a number of capital needs and we continue to build capacity to execute on those,” he said. “I do think it’s likely that we will continue to access the market; it’s just too early for us to say today whether that will be significantly more frequent than currently planned, but we do believe that there will be a need for Detroit to regularly access the market for its capital needs. That means that beyond the additional planned debt there will be bond deals that will follow and what we are trying to do is to build out the system so that we have a regular cadence of going to market and meeting the needs of the city with respect to capital.”

The city already offers investors access to its financial data and bond offerings through its BondLink web portal. Massaron said that the city is considering further investor outreach and will work with PRAG “to make sure that anything and everything investors want is easily and readily accessible.”

Moody’s Investors Service rates Detroit’s general obligation bonds Ba3, three notches below investment grade, and last upgraded the city nearly a year ago. S&P Global Ratings in February upgraded the city’s general obligation ratings to BB-minus — also three notches away from investment grade — from B-plus.

On Thursday Moody’s cited the city’s continued progress on a $2.5 billion deal with Fiat Chrysler Automobiles as credit positive for the city. The city last week announced it had acquired 200 acres of land needed to keep the deal to build a new assembly plant alive. In addition to the land acquisition, the city has also agreed to tax abatements for FCA. The deal now goes to the Detroit City Council for final approval, and FCA could break ground as early as June.

“We are obviously pleased that people are recognizing the work we have done,” Massaron said. “There are still a lot of transactions left to close and process left to get through, but we are chipping away and confident that we are going to be able to bring this deal home.”

The deal, which would see the auto manufacturer invest $2.5 billion at two sites in Detroit, could create around 5,000 job’s to the city’s workforce, which would serve to boost its income tax receipts. Moody’s said that the growth in income tax collection would be a credit positive for the city as it is its largest revenue source, comprising over a quarter of operating revenues in fiscal year 2018.

Ford Motor Co. has plans to redevelop Michigan Central Station and to create a tech campus that will create up to 5,000 jobs. At the end of last year General Motors Co. announced plans to close its Detroit-Hamtramck Assembly plant by 2020. Moody’s said in the report that FCA’s planned job additions will far exceed the number of jobs that will be lost at GM.

PRAG Ranked #2 Financial Advisory Firm in the Nation in First Half of 2019

August 2019

PRAG ranked #2 Financial Advisory Firm in the nation in the First Half of 2019 with 68 issues totaling $16.885 billion, according to Thomson Reuters.

PRAG also ranked #1 as the “Top Financial Advisors (Competitive)” in the First Half of 2019, having advised on 43 competitive issues totaling $8.775 billion, as well as #3 “Top Financial Advisors (Negotiated)” with 25 issues totaling $8.110 billion.

According to Thomson Reuters, PRAG has been consistently ranked as one of the top three financial advisory firms nationally every year over the past two decades.

PRAG’s financing experience includes revenue bonds, general obligation bonds, certificates of participation, commercial paper, revenue and tax anticipation notes, bond anticipation notes, securitizations, non-dollar denominated bonds, index notes, stepped-coupon obligations, as well as taxable municipal securities.

PRAG is registered as a municipal advisor with the MSRB (MSRB ID K0133) and the SEC (Municipal Advisor Registration Number 867-00146). In addition, PRAG is a registered investment adviser in the State of New York, with additional registrations in the states of California, Florida, Pennsylvania and the District of Columbia.

PRAG Ranked #2 Financial Advisory Firm in the Nation in 2018

January 2019

PRAG ranked #2 Financial Advisory Firm in the nation in 2018 with 176 issues totaling $36.1 billion, according to Thomson Reuters.

PRAG also ranked #1 as the “Top Financial Advisors (Competitive)” in 2018, having advised on 92 competitive issues totaling $17.4 billion, as well as #2 “Top Financial Advisors (Negotiated)” with 84 issues totaling $18.7 billion.

According to Thomson Reuters, PRAG has been consistently ranked as one of the top three financial advisory firms nationally every year over the past two decades.

PRAG’s financing experience includes revenue bonds, general obligation bonds, certificates of participation, commercial paper, revenue and tax anticipation notes, bond anticipation notes, securitizations, non-dollar denominated bonds, index notes, stepped-coupon obligations, as well as taxable municipal securities.

PRAG is registered as a municipal advisor with the MSRB (MSRB ID K0133) and the SEC (Municipal Advisor Registration Number 867-00146). In addition, PRAG is a registered investment adviser in the State of New York, with additional registrations in the states of California, Florida, Pennsylvania and the District of Columbia.

PRAG Celebrates its 30th Anniversary

May 1, 2015

PRAG, fou30 years in Businessnded in 1985, celebrates its 30th anniversary as a leading independent financial advisor to state and local governments, authorities, agencies and other entities that secure funding in the public capital market. Since PRAG’s inception, the firm has remained committed to providing high-quality independent advice, responsive service and the commitment of experienced personnel, supported by credit, market and quantitative expertise. PRAG looks forward to serving our valued clients for many years to come.