7- Impact of the Recession- Steve Whalen

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A description of the impact the recession has had on investment decisions, disclosure and macro ecnomic factors, by Stephen Whalen, Liberty Mutual Group. Part of Current Topics in Tax-Exempt Finance 10/29/2010.

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7- Impact of the Recession- Steve Whalen

  1. 1. MassDevelopment Presents: Current Topics in Tax-Exempt Finance October 29, 2010 Steve Whalen, Liberty Mutual Group
  2. 2. Recession Impact on Investment Decision Process • More Emphasis on “peripheral” factors: – Investment Allocation – Liquidity Analysis – Variable Rate Debt support facilities (term, counterparty, covenants) – Swaps – Pension Liabilities
  3. 3. Recession Impact on Disclosure • More frequent disclosure is sought for sectors where annual was the previous norm (HE) • No longer a distinction between insured/non-insured with regard to disclosure
  4. 4. Disclosure Investor Calls • No Pre-Recorded Calls! Investor Q&A is an extremely important part of analyzing an investment opportunity and provides for more uniform disclosure
  5. 5. Disclosure • Borrowers should imagine themselves as potential investors when structuring their presentations: – Define market presence (leading or niche player, etc.) – Define overall strategy (maintain presence, growth) – Identify any negative trends, diagnose them and convey a strategy for reversing them – Articulate management goals for certain financial benchmarks (DSC, DCOH, Debt/Cap, selectivity, enrollment, etc.) or ratings – Summary: Tell your story in a way that shows you know where you’ve been, where you are and where you are headed!
  6. 6. Macro Economic Factors • Implications of Increasing Fiscal Pressure on States (Pensions, OPEB, Tax Burdens): – For Hospitals, more focus on public payor reliance, Medicare and Medicaid – For Colleges, reliance on state or federal grant funding, appropriations • Recent example, University of HI, WA
  7. 7. Macro Economic Factors • Implications of Increasing Fiscal Pressure on States (Pensions, OPEB, Tax Burdens): – For Hospitals, more focus on public payor reliance, Medicare and Medicaid – For Colleges, reliance on state or federal grant funding, appropriations • Recent example, University of HI, WA

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