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.

1. MassDevelopment Presents:
Current Topics in Tax-Exempt Finance
October 29, 2010
Steve Whalen, Liberty Mutual Group

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. 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. 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. 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. 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. 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