Meeting Notes
Thursday, February 20, 2025, 11:00 a.m.
In accordance with Section 20 of Chapter 20 of the Acts of 2021, as extended by Chapter 107 of the Acts of 2022, this meeting will be conducted, and open to the public, via Zoom and Teleconference.
Zoom Link: https://us02web.zoom.us/j/82031335207?pwd=AKLgiOGP28F2tKva04MfmhRz6rQbuE.1
Meeting ID: 820 3133 5207
Passcode: 559071
Teleconference line: 1-646-931-3860; Phone Conference code: 559071#
The meeting was called to order at approximately 11:00 a.m.
Board members comprising a quorum:
- Brent Andersen, Pilgrim Bay Insurance
- Kaitlyn Connors, Executive Office for Administration and Finance, Board Interim Chair
- John Durgin, Office of the State Treasurer
- Sue Perez, Office of the State Treasurer
Others in attendance:
- Christina Marin, Office of the State Treasurer
- Cory Bannon, Office of the State Treasurer
- Victoria Gudaitis, Executive Office for Administration and Finance
- Paul Scola, MassHousing
- Kathleen Connolly, MassHousing
I. Administrative Matters
I. Ms. Connors called the meeting to order and conducted the roll call. On a motion made by Mr. Andersen and duly seconded by Sue Perez members voted unanimously to approve the January 16, 2025, meeting minutes. Ms. Connors then moved to the next agenda item: Waiver Requests.
2. Discussion
I. No discussion matters scheduled.
3. Waiver Requests
I. Office of the State Treasurer – Commonwealth General Obligation (Vote)
Mr. Bannon from the Treasurer’s Office Debt Management Team presented the Commonwealth’s Waiver request to the State Finance and Governance Board (the “Board”).
Mr. Bannon explained that the Commonwealth’s use of SFGB waivers from competitive sales continues to be prudent. TRE approaches all transactions under the assumption that most bonds will be sold on a competitive basis. However, when market conditions or the structure of the bonds warrant the flexibility of a negotiated sale, the Commonwealth has sought waivers in certain situations. Mr. Bannon noted that recently, uncertain market conditions due to Federal Reserve Bank action, volatile economic conditions, as well as geopolitical issues have required significant pre-sale marketing to ensure broad market support and assist in structuring that will provide the best results for the Commonwealth. Given the current volatility in the fixed income markets, a negotiated transaction gives the Commonwealth flexibility for pricing dates as well as lengths of order periods.
Mr. Bannon concluded by noting that having the ability to execute negotiated transactions ensures contingencies can be met in the near-term and asked that the Board approved the State Treasurer’s Office waiver request in the amount of $2.5 billion for new money and/or refunding transactions, which will expire on August 20, 2025.
On a motion made by Ms. Perez and duly seconded, the Board voted unanimously to authorize the Commonwealth (i) to issue bonds in an aggregate principal amount up to $2,500,000,000 for new money and/or refunding issues in one or more series and in one or more transactions; (ii) to price the bonds in any such transactions on a date or dates no later than August 20, 2025; and (iii) to sell any such bonds on a negotiated basis.
4. Derivative Reviews
I. Mr. Paul Scola, Senior Director of Finance and Bond Compliance for the Massachusetts Housing Finance Agency (“MassHousing”) presented the agency’s derivative review requests to the Board, noting that MassHousing has two requests today: the first, for multifamily bonds and/or notes to finance up to $800 million using a mix of fixed rate and/or hedged or unhedged variable rate debt; and the second for Home Ownership bonds and/or notes to finance up to $600 million using a mix of fixed rate and/or hedged or unhedged variable rate debt. Both requests are related to MassHousing Board of Directors vote of approval (taken February 11, 2025).
Mr. Scola described the requests as a reauthorization of variable rate bonds or notes for Multifamily and Homeownership, in each case with related swaps, which the Board reviewed and voted to approve at the August 22, 2024 meeting. However, since more than 6 months has passed, MassHousing is seeking a new vote. Materials included a report from MassHousing’s Financial Advisor cfX Incorporated which includes details on the proposed transaction.
Mr. Scola explained that for both multifamily and home ownership bonds, the addition of new variable rate debt, in reasonable amounts, and in combination with interest rate swaps to reduce interest rate risk, will enable MassHousing to lower the future cost of debt. This will allow MassHousing to provide lower mortgage rates to its borrowers, maintain positive net income and balance sheet growth, and preserve high ratings.
Ms. Connors then asked if any board members had any questions. There were no questions from board members. Board members unanimously vote to approve the requests.
5. Closed Transactions/Bond Sale Reviews:
I. Office of the State Treasurer – Commonwealth Transportation Fund
Mr. Bannon presented three bond sale reviews to the Board: the Commonwealth Transportation Fund (CTF) 2023 Series A, B, and Refunding Series A Bonds. In October 2024, the Commonwealth sold $489.8 million in Commonwealth Transportation Fund revenue bonds in three series.
The bonds were sold on a negotiated basis and included $150.0 million in “new money” bonds and $125.0 million in “new money” sustainability bonds. Both series of bonds were for the Rail Enhancement Program. Mr. Bannon noted that the transaction also included a $214.8 million refunding. The bonds are rated AAA by Kroll, AA1 by Moody’s and AAA by S&P. Bank of America (BofA) served as the book-running manager for the bond issue and Ramirez was the joint book-running manager. The full syndicate was made up of 7 firms, which was selected via a competitive RFP process.
Bonds were priced the week of September 30th. Order flow during the retail order period was strong, generating $307.2 million orders. Institutional order sales totaled $614 million. During the institutional order period treasuries were higher by up to 5 bps from the night before coupled with a significant MMD move from the previous day. These factors contributed to weakened investor demand. Ultimately yields were reduced on the front end of the curve by 2-4 bps.
Ms. Connors then asked if any board members had any questions. There were no questions from board members. Board members unanimously vote to approve the requests.
6. Discussion on Board Activities
I. No matters scheduled.
7. Adjournment
I. On a motion made by Mr. Andersen, and duly seconded by Ms. Perez, members voted to adjourn. The meeting officially adjourned at approximately 11:15 AM.
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Kaitlyn Connors, Acting Chair