8 Colo. Code Regs. § 1508-2-1.9

Current through Register Vol. 47, No. 20, October 25, 2024

Section 8 CCR 1508-2-1.9 - Methods of Sale

It is in the State's best interest to sell its Financial Obligations using the method of sale that is expected to achieve the best sales results, taking into account both short-range and long-range implications. In order to ensure that the State's best interests are being met, it is important for the State Treasurer to be actively involved in any method of sale.

A.Factors for Determining Method of Sale.

(1) Considerations which support a competitive sale process include, but are not limited to the following: the Financial Obligation has an unenhanced credit rating favorable to the market; the Financial Obligation is appropriately sized to attract investors without a concerted effort; and interest rates and other economic factors are stable and market demand is strong.

(2) Considerations which support a negotiated sale process include, but are not limited to the following: the Financial Obligation is not large enough to attract market interest; market timing will be a critical factor in garnering the lowest possible interest rate; the financing requires a complex or innovative structure; the market has concerns about the credit quality of the Financial Obligation; and the market is unfamiliar with the project, the structure of the financing or the revenues pledged for annual repayment.

B.Initiating a Competitive Sale. The Official Notice of Sale (the "Notice") will be published in the most appropriate method of advertisement, such as MSRB's EMMA website. The Notice will announce the State's intent to sell Financial Obligations and will contain references to relevant security and structural information that interested bidders may require. The Notice will clearly indicate the permissible discounts, premiums and basis of award, including additional requirements to acknowledge MSRB and SEC compliance.

C. Parameters for Underwriter Selection for a Negotiated Sale. When the State Treasurer determines that a negotiated sale is in the best interests of the State, the State Treasurer may retain underwriters to execute the sale of Financial Obligations.

(1)Co-Managers and Selling Groups. If underwriter co-managers and/or a selling group are deemed appropriate to the sale of Financial Obligations, those underwriters will be engaged by the State Treasurer. Underwriters will be selected by an open and competitive bidding process.

(2)Pricing and Allocation of Sales.

(a) The negotiation of terms and conditions will include, but not be limited to: prices, interest rates, underwriting or remarketing fees and commissions, based on prevailing terms and conditions in the marketplace for comparable issuers, lessees and obligors and similarly secured and rated Financial Obligations in addition to the State's recent experience.

(b) If more than one underwriter is included in the sale of the Financial Obligation, the State Treasurer will establish the general guidelines of the allocation of fees, liability and underwriting in a manner consistent with the objectives of the State.

(c) Criteria to be used in determining the allocation of Financial Obligations sold by selected underwriters will include, but not be limited to:

(i) Demonstrated performance in the sale of previous issues of financial obligations;

(ii) Demonstrated commitment to the overall goals of the State's financing programs.

(3)Underwriter's Responsibilities for a Negotiated Sale. Contemporaneous with the execution of a purchase contract for Financial Obligations, the senior manager of a financing will:

(a) Provide for the fair allocation of Financial Obligations to underwriters and selling group members, consistent with the previously negotiated terms and conditions of allocation, as referenced in any related agreement among underwriters;

(b) Provide affirmation of compliance with all current MSRB regulations; and

(c) Agree to submit to the State a complete and timely account of all orders, allocations and underwriting activities related to the sale of Financial Obligations under its management.

D.Parameters and Criteria for a Private Placement. As part of the sale process, the State Treasurer may determine it is in the State's best interest to authorize a private placement of the Financial Obligation, based upon the following considerations: Size of issuance; limited and simple project scope and collateral; little market interest in small dollar amount of financing; interest rate; covenants; non-market redemption provisions; and savings associated with normal closing transaction fees for financial professionals.

In a private placement, the State Treasurer will prepare and distribute a request for proposals from financing companies and financial institutions and select the bid most advantageous to the State.

8 CCR 1508-2-1.9

. Rules 1.11 emer. rule eff. 06/14/2013.

. Rules 1.12 emer. rule eff. 06/14/2013.

. Rules 1.4 emer. rule eff. 06/14/2013.

Rule 1.11 eff. 09/14/2013.

Rule 1.12 eff. 09/14/2013.

Rules 1.4 eff. 09/14/2013.