2001 was the second largest year ever for municipal bond issuance,
with an overall volume of more than $286.3 billion. FGIC insured a record
$31.4 billion or 23.9% of total insured volume, as compared to $20.2 billion
in 2000. In this environment, the ability to meet market demand was critical.
The solution was a cross-company collaboration, drawing on expertise from
FGIC underwriting, legal and risk management teams and best practices from
GE Capital which generated streamlined paperwork, faster credit approvals
and a simplified commitment letter.
Customer-centric approach to “get to a yes.”
Broadening our underwriting criteria in the core infrastructure sectors and taking a new, innovative and flexible
approach to better meet our customers’ needs are the foundation of our refocused
business strategy. Through digitization of processes such as the Digitized
Analysis and Rating Tool, analysts now spend more time working directly with
customers. Dedicated Account Management Teams can quickly and efficiently
meet a fuller range of customers’ needs and provide flexibility in structuring
transactions. Working with Risk Management in a new partnership, our goal
is to “get to a yes” while still maintaining our rigorous and zero-loss underwriting
discipline. Our business strategy is and will continue to be driven by the
voice of the customer.
In 2001, our attention was not limited to listening to our customers and broadening
our “strike zone.” The tragic events of September 11th put all of our skills
to the test. Thanks to the teamwork of our dedicated employees, we had our
business up and running in 24 hours and contacted all of our customers. We
were leading by example, helping to bring stability to the market.
It was August when the City of Detroit’s investment banker and financial advisor contacted Seth Lehman, FGIC Public Finance Director. The proposed transaction was complex, requiring almost $700 million of new money plus refunding sewer bonds with two series of variable rate bonds and two series of fixed rate bonds.
We quickly assembled a cross-business team with the clear knowledge that underwriting and approval on a timely basis would be difficult, given the Labor Day holiday, as well as the involvement of several bond counsels and key FGIC personnel. However, with the right team in place and our wide array of products, we were able to make an offer: bond insurance on the principal and interest portion of the bonds, reserve fund insurance in place of a cash-funded reserve, and our highest short-term-rated liquidity facility.
But after the bids were taken, the City of Detroit, on the advice of its advisors, determined that the deal structure needed changes in order to strengthen investor demand for the bonds. This time we responded with several different deal structures, each of them cost-effective to both the issuer and FGIC. After extensive negotiations and deal structures changing literally by the hour, the City of Detroit offered six series of bonds, of which FGIC insured four. The success of this transaction reinforces the importance of listening to the voice of the customer, assembling the right customer team, and having the ability to be creative and flexible.
