appa national conference: financing capital projects in difficult market conditions

APPA National Conference:Financing Capital Projects in Difficult Market Conditions

Panelists:

Michael Mace, Managing Director, Public Financial Mgmnt.

John Murphy, Sr. Research Analyst, Fidelity Investments

Karl Pfeil III, Managing Director, Fitch Ratings

Financing Capital Projects in Difficult Market Conditions

Karl H. Pfeil III, Fitch Ratings

June 15, 2009

www.fitchratings.com 3

The Credit Drivers of the Current Market Environment

> The Basic Pillars of Public Power Credit

> New Rating Considerations:

– Economic Issues

– Financial Considerations

– Environmental Credit Considerations

> Fitch Ratings’ Public Power Outlook - How Does it Stack to other Sectors?


Primary Credit Factors

1. Mgmt

2. Service Territory

3. Assets & Operations

4.Cost

Structure

5. FinancialsAnd

Legal’s Utility’s

Credit


Location, Location, Location

> Each region has distinct

characteristics affecting the utilities’

credit profile:

— Fuel supply

— Water supply

— Environmental

— Regional politics

— Service territory characteristics

— New developments


US Annual Real GDP Change - History + Projections

1.0

-3.4

-15

-10

-5

0

5

10

15

20

25

193

0

193

5

194

0

194

5

195

0

195

5

196

0

196

5

197

0

197

5

198

0

198

5

199

0

199

5

200

0

200

5

201

0

An

nu

al %

Ch

an

ge

Gross domestic product Fitch Baseline Proj Bloomberg Median Proj

2009

201


Average Annual US Unemployment Rate

9.0

10.0

0

2

4

6

8

10

12

1970

1972

1974

1976

1978

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

2010%

Un

emp

loym

ed

Unemployment Fitch Baseline Proj Bloomberg Median Proj

2009

2010


Annual Change in Personal Consumption Expenditures

-3.3

0.0

-10

-5

0

5

10

15

1930

1933

1936

1939

1942

1945

1948

1951

1954

1957

1960

1963

1966

1969

1972

1975

1978

1981

1984

1987

1990

1993

1996

1999

2002

2005

2008%

Ch

ang

e

Personal consumption expenditures Fitch Baseline Projection

2009

2010


Financial Considerations


Financial Ratios

> Coverage (How much cash flow cushion is there to pay the utility’s fixed obligations?)

— Debt service coverage

— Debt/funds available for debt service

> Liquidity (how much cash does the utility have relative to its operating expenses?)

— Days cash on hand

— Days liquidity on hand (includes CP capacity & lines of credit)

— Free liquidity to support variable rate debt

> Leverage (how much equity has the utility built up relative to its asset base?)

— Equity/capitalization

— Debt/funds available for debt service

> Other

— Variable rate exposure as % of capitalization

— Annual capital additions

— Five-year capital improvement plan and financial projections


Gross Variable Rate Debt/Capitalization (%)(2006-2008)

0

10

20

30

40

50

60

70

80

90

100

Issuers

%

FY 2006

FY 2007

FY 2008


Greenhouse Gas/Carbon Reductions CO2 Regulation: Not if but when

> Fitch Ratings believes that there will be a carbon law at the federal level

> Increasing number of state regulators are placing a cost on carbon in rate

making proceedings

> More traditional Wall Street investors are now looking at carbon issues


Public Power Outlook


For a Stable Sector – The Issues Are Very Complex

Economy and

Housing Declines

Economy and

Housing Declines

Rates / Regulation

Rates / Regulation

Fuel Costs

Fuel Costs

EnvironmentalRegulation

EnvironmentalRegulation New GenerationNew Generation

Increasing Capital Costs

Increasing Capital Costs


Fitch Ratings’ Public Power Credit Outlook for 2009

> The Outlook into 2009 is Stable with near-term pressures on individual credits that

could result in increased negative rating actions

> The longer-term Outlook reflects increasing negative cost pressures

> While our near-term outlook for the sector is stable, if current pressures such as

limited capital market access together with increasing economic stress that persists

long into 2009, a change in Outlook to Negative may be warranted

> Public power has historically proven itself to be a very solid investment despite past

complexities facing the industry such as deregulation, fuel price volatility, and the

corporate credit crisis

Fitch Ratings

www.fitchratings.com

Singapore

6 Temasek Blvd.

#35-03/04/05

Suntec Tower Four

Singapore 038986

+65 6336 6801

New York

One State Street Plaza

New York, NY 10004

+1 212 908 0500

+1 800 75 FITCH

Fitch Group Fitch Ratings Fitch Solutions Algorithmics

London

101 Finsbury Pavement

London

EC2A 1RS

44 20 7417 4222

What Investors Really Want!John M. Murphy, Research Analyst

Fidelity InvestmentsAPPA National Conference

June 2009

www.fitchratings.comFidelity Management & Research Co.

19

What Investors Really Want!

Research

Trading & Markets

Portfolio Management


20

What Research Really Needs!

Research Security

• First Mortgage• Gross vs. Net Revenue Pledge• Liquidity Facilities• Market Access Alone is NOT a Security Interest• Access to All Pertinent Deal Documents• Covenants

Disclosure• More Frequent Release of Financial Results• Derivative and Counterparty Exposures• Material Events

Transparency• Semi-Annual Conference Calls or Internet Road Shows• Access to Management via Conferences, Calls or Meetings


21

What Traders Really Need!

Trading & Markets Surveillance, Primary and Secondary Appropriate Spread Structure: Fixed vs. Floating Duration / Maturity Dealer Support

Date Cusip Description ST Sector INS CPN MAT OIY ParDate MoodyBidYieldOfferYieldBidYSOfferYSMullerYieldSize Dealer Initial05/14/09 927675AC VIRGIN IS P UB(HOVENSA LLC) 5.87% 07/01/22@ VI IDB 5.88 07/22 5.88 07/14 Baa3 9.92 FAKE05/14/09 927675AD VIRGIN IS P UB(HOVENSA LLC) 4.70% 07/01/22@ VI IDB 4.70 07/22 4.70 01/15 Baa3 9.95 6.46 9.73 FMR Bid05/14/09 658196S8 NC E MUNI(AGC) 5.25% 01/01/19 NC J OIN AGC 5.25 01/19 4.40 01/18 Aa2 4.20 4.05 1.20 1.05 4.47 10,000 MSCO Cu/O05/14/09 56036YBF GA GAS P ROJ (J P MC CO) 5.00% 03/15/22 GA SGAS 5.00 03/22 4.21 Aa3 5.55 5.48 2.06 1.99 5.64 4,000 SBHU MKT05/14/09 79575DVC SALT RIVER AZ 5.00% 01/01/37 AZ E&G 5.00 01/37 4.75 01/16 Aa1 4.70 4.70 0.06 0.06 4.72 10,000 SBHU Cu/O05/14/09 542690U3 LIP A NY 5.75% 04/01/39 NY E&G 5.75 04/39 5.87 04/19 A3 5.01 0.33 5.12 635 MOTC Inven05/14/09 575765MY MA MUNI WHSL(AMBAC) 5.31% 07/01/18 MA J OIN AMBAC 5.31 07/18 0.00 07/07 #Aaa FAKE05/14/09 02765UBC AMERICAN MUN OH 5.00% 02/15/38 OH J OIN 5.00 02/38 5.36 02/18 A1 5.15 0.50 5.11 330 LOOP VB Ofr05/14/09 02765UBC AMERICAN MUN OH 5.00% 02/15/38 OH J OIN 5.00 02/38 5.36 02/18 A1 5.13 0.48 5.11 330 MNGT MC Ofr05/14/09 02765UBC AMERICAN MUN OH 5.00% 02/15/38 OH J OIN 5.00 02/38 5.36 02/18 A1 5.15 0.50 5.11 340 WCHV BDSK Ofr05/14/09 033177XH ANCH AK EL MBIA 5.125% 12/1/25 AK E&G MBIA 5.13 12/25 4.24 12/15 A1 125 BLBG BW05/14/09 052414CG AUSTIN TX ELEC(AMBAC) 5.50% 11/15/14 TX E&G AMBAC 5.50 11/14 4.28 A1 2.98 640 BLBG BW05/14/09 052414EU AUSTIN TX ELEC(FSA) 5.00% 11/15/26 TX E&G FSA 5.00 11/26 4.52 11/16 Aa3 4.55 0.39 90 DRAU Inven05/14/09 052474LF AUSTIN TX USR(AMBAC) 6.75% 11/15/11 TX E&G AMBAC 6.75 11/11 6.20 WR 2.67 25 BLBG BW05/14/09 076099AW BEDFORD VA IDA 6.55% 12/01/25@ VA IDB 6.55 12/25 6.55 12/11 B2 9.50 5 BLBG BW


22

Evaluating Structural Relationships Over Time

Increased focus on quantitative infrastructure is necessary because municipal bond valuations are influenced by many variables.

2/3/09

Slope Z-Score Roll is… Slope Z-Score Diff is… Mty Z-Score AAA is… Mty Z-Score AAA is… Mty Z-Score AAA is… Mty Z-Score BMA is…1-2 1.47 Steep 2-5 1.03 Steep 1 -2.32 Rich 1 0.53 Fair 1 -3.68 Rich 1 -2.10 Rich2-3 0.31 Avg 5-10 2.29 Steep 2 -1.32 Rich 2 1.02 Cheap 2 0.21 Fair 2 2.46 Cheap3-4 1.36 Steep 2-10 1.71 Steep 3 -2.34 Rich 3 0.39 Fair 3 -0.38 Fair 3 2.41 Cheap4-5 1.74 Steep 10-20 3.97 Steep 5 -2.24 Rich 4 0.61 Fair 4 -0.23 Fair 5 2.45 Cheap5-6 1.93 Steep 10-30 3.97 Steep 7 -1.33 Rich 5 0.70 Fair 5 0.01 Fair 7 2.49 Cheap6-7 2.14 Steep 2-30 2.56 Steep 10 0.04 Fair 6 0.42 Fair 6 0.27 Fair 10 2.51 Cheap7-8 2.18 Steep 5-30 3.22 Steep 12 0.72 Fair 7 0.14 Fair 7 0.53 Fair 15 2.55 Cheap8-9 2.33 Steep 15 1.27 Cheap 8 0.05 Fair 8 0.74 Fair 20 2.49 Cheap9-10 2.71 Steep 20 1.79 Cheap 9 0.09 Fair 9 0.92 Fair 30 2.51 Cheap

10-11 2.95 Steep 30 1.90 Cheap 10 0.26 Fair 10 1.10 Cheap11-12 3.61 Steep 12 0.79 Fair 15 1.77 Cheap12-13 3.13 Steep 15 1.35 Cheap 20 2.02 Cheap13-14 3.78 Steep 20 1.78 Cheap 30 2.07 Cheap14-15 4.45 Steep 30 1.91 Cheap15-16 3.10 Steep16-17 3.42 Steep17-18 3.54 Steep18-19 4.20 Steep19-20 3.48 Steep

BMA/ LIBOR Ratio

Historical Calculation Period

Report Date:Municipal Relative

Value

AAA Rolls AAA Spreads AAA-BMA SpreadAAA vs. TSY AAA vs. LIBOR

Create Report

CCCCCCC

CCCCCCCCCC

CCCCCCC

CCCCCCC

CCCCCC

CCCCCCC

CCCCCC

CCC

3 Months

6 Months

9 Months

12 Months

24 Months

36 MonthsEXIT

Use Rate-Normalized ModelUse Ratio Model

5 Years9 Years

10yr AAA / TSY Ratio

0.70

0.80

0.90

1.00

1.10

1.20M

ar-

07

Apr-

07

Jun-0

7

Aug-0

7

Sep-0

7

Nov-0

7

Jan-0

8

Feb-0

8

Apr-

08

Jun-0

8

Yie

ld R

ati

o


23

What PM’s Really Need!

Portfolio Management Sector Weights Index Weighting Security Selection

PMV Difference ViewS MUN F MUN AZ MA MN TFR CA CA SI MI NJ OH EIM INT SHT CT MD NY PA

State GO -5.39 -5.16 -3.98 -11.14 -4.69 -5.17 -10.21 -13.34 -11.04 -12.11 -5.06 -8.75 -8.03 -27.68 0.17 0.21 -1.81 -6.11 Local GO -1.81 -4.33 -1.75 4.81 -1.71 -4.89 -3.77 -2.90 -12.07 11.38 -7.58 -8.37 -7.70 -1.26 -20.51 -9.62 7.81 -20.10 Special Tax -2.19 -2.33 -1.39 -4.12 1.06 -1.18 5.68 -2.22 -6.24 -11.04 -2.62 2.16 0.12 -0.25 -9.59 -9.13 -1.69 -3.79 Lease -0.73 -2.29 1.66 -6.19 0.13 -0.26 -1.45 -0.55 -0.58 0.35 -0.35 -0.36 0.64 1.75 -1.89 -4.76 5.65 Electric -0.59 -1.55 -0.49 6.45 -0.56 -3.61 -3.23 -1.26 -1.21 2.29 1.03 -3.92 -1.00 -0.03 -1.68 Health Care -0.89 -1.06 -3.20 -1.33 -3.04 -0.19 2.23 2.21 -1.18 -2.85 -0.98 -0.53 0.43 -0.24 -0.06 0.28 Housing -0.37 -0.54 1.75 -0.21 -6.74 -0.64 -0.98 -0.07 -0.99 -1.06 -4.30 -1.24 -0.60 -0.04 -2.56 Education -0.21 -0.21 -1.28 -0.92 -0.03 -0.89 -0.85 -0.50 -0.17 -0.36 -0.83 1.90 0.90 -1.46 1.50 IDB -0.13 -0.11 0.94 0.42 1.88 0.22 -0.42 -0.19 0.29 0.94 -0.04 0.14 1.47 -0.84 -0.13 Water 0.32 -0.11 -0.24 -0.70 -0.92 -0.07 2.90 1.15 0.11 -0.78 0.93 -0.83 -0.65 0.35 0.93 2.64 0.42 -0.27 Transportation -0.88 0.15 6.03 1.84 1.52 -0.19 -0.04 1.19 3.59 0.13 6.10 1.28 1.06 0.66 Resource Rec 0.21 0.29 0.67 0.36 4.15 0.07 -0.51 1.41 -1.54 2.53 -1.16 -1.48 1.71 2.71 0.54 2.06 0.88 4.97 Pool 0.19 0.33 -0.23 1.27 4.57 0.96 0.64 1.73 0.27 -0.23 0.70 -0.26 0.52 0.91 5.51 9.93 -2.77 4.67 PreRe -0.58 0.47 1.51 -0.08 11.67 0.46 0.60 1.77 0.03 2.91 0.19 0.76 -0.28 -1.01 Escrow 0.61 -0.11 0.63 0.68 1.95 -0.93 3.95 3.21 3.26 -0.72 0.74 0.53 2.63 1.98 3.67 0.56 4.66 XOver 2.42 0.71 4.07 0.86 1.95 10.42 4.10 4.82 -1.38 -0.49 0.29 12.46 9.81 2.14 -2.01 5.25 5.14 4.09 Tobacco 0.91 1.16 -4.38 0.88 -7.97 4.41 7.65 5.24 27.81 5.95 11.92 11.32 4.82 0.50 6.45 2.57 0.39 -2.21 Other 4.24 3.10 -6.59 3.20 -0.23 0.46 -0.64 -0.21 -0.17 7.32 4.44 -0.62 0.35 -3.16


24

The Answer is….

Everything!

PFM

The PFM GroupMike MaceManaging DirectorPublic Financial Management

Information Prepared for the

Annual Meeting

Challenges & Uncertainty

vs.

Solutions & Opportunity

June 15, 2009

PFM

26

Public Power Finance in a Challenging Environment

26

• Introduction

• Impacts of the Financial Crisis

• Current Challenges

• The Solutions

• Preparing for the Next Challenges

PFM

27

Introduction

27

• Public Financial Management

- Offering financial and investment advice to governments & not-for-profits

- 400 professionals in 30+ offices throughout the US

- Two separate operating companies

- No bond underwriting or trading for our own account

- Helping our clients maximize financial value

- Within risk tolerances consistent with public sector objectives

Public Financial Management

Financial Advice & Strategic Consulting

$50+Bn/Yr Capital Markets Transactions

10 Person Public Power Group

PFM Asset Management

Investment Management & Consulting

SEC Registered & Regulated

Managing $35+ Billion of Client Assets

PFM

28

Crisis… What Financial Crisis?

28

• Borrowing Costs Under /Around 5.00%, Short-Term Rates Almost Zero!

• Investment Rates are Up, Stock Market Has Been Strong

• Natural Gas and Commodity Prices Beginning to Make Sense Again

2.00

3.00

4.00

5.00

6.00

7.00

8.00

Rates % Long Term Rates Over the Past Year

AAA GO A ELEC REV TREASURY

PFM

29

More Good News Than We Have Time For

29

• Retail Investors Have Been Big Buyers of Public Power Bonds- LIPA in January ~$250 MM Retail Orders for $435 MM Bonds

- SRP in January ~$300 MM Retail Orders for $744 MM Bonds

- JEA in February $71 MM Retail Orders for $129 MM Bonds

- Energy Northwest in March ~$270 MM Retail Orders for $370 MM Bonds

- JEA in April $98 MM Retail Orders for $64 MM Bonds

- CMEEC in April $68 MM Retail Orders for $38 MM Bonds

• Taxable Build America Bonds Have Been a Huge Success

- SMUD sells $200 MM long-term bonds at a net rate of 4.11%

- CPS Energy sells $375 MM long-term bonds at a net rate of 3.89%

- Both issues receive investor orders ~4+ times their size

• MEAG Power & CPS Energy Projects Atop DOE Nuclear Guarantee List

PFM

30

More Good News Than We Have Time For

30

• MEAG Power Finances Initial Stage of Vogtle Expansion- Tax-exempt, 13-month notes ranging from 0.47% to 0.85%- Taxable, 13-month notes at 1.90%- Total of ~$500 MM averaging 0.84%

• OUC Sells $200 MM One-Year Notes at 0.45%

• SRP Rolls 30- and 60-Day Commercial Paper at 0.23% and 0.28%

• JEA Short-Term Bonds Reset at 0.23%

• MMWEC “Failed” Auction Rate Bonds Reset at 0.06% (not a typo!)

• SMMPA Renews Two-Year Credit Facility at 0.70%

PFM

31

Public Power Financing – Challenges Remain

31

• #1: Change - Dramatic, Fast-Paced & Unprecedented

THEN NOW

– Bond Insurance: commonplace non-existent

– Auction Rate: solution problem

– Bank Letter/Lines: cheap → expensive → unavailable

– Gas Prepays: huge savings huge headaches

– Bond Market: good → volatile → closed → wide open

– Derivatives: free money &*$%#@!

– Fuel/Energy Hedging: saving money just a hedge

Last Year’s Solutions Became This Year’s Problems

Fortunately, the Problems Have Been Manageable

Public Power Fares Better Than Most Market Sectors

PFM

32


32

• #2: Long-Term Planning in a Time of Uncertainty- Resource decisions: WHAT?, WHEN?, IF?

- The high cost of risk aversion and mitigation

- When does “normal” return and what does it look like?

- How do you make 40+ year decisions in a 12-month window of turmoil?

• #3: Managing Environmental Alternatives, Impacts & Costs

• #4: The Economy vs. Credit Strength- High credit ratings have never been more valuable

- Your customers are under considerable pressure

- Local governments have significant needs

- Where is the proper balancing point?

PFM

33


33

• #5: Liquidity Concerns- Fuel and purchased power contract collateral postings

- Interest rate swap collateral postings and termination payments

- Revenues falling or failing to rise

- Rating agency scrutiny of bank letter/line of credit repayment provisions

- The business is more volatile, and requires more reserves

- Yet liquidity is more expensive than in the past

• #6: Reduced Competition on the Financial Playing Field- Fewer Underwriters, Insurers, Commercial Banks

- Staffing has declined at remaining firms

- Fees have increased

- Bank Letter/Line capacity and pricing will remain a problem

- Short-term program fees are up to 6X the actual short-term interest rates

PFM

34

Public Power Financing – The Challenges

34

• How Are We Doing So Far?

→

PFM

35

Public Power Financing – The Solutions

35

• The Stimulus Bill and Build America Bonds- Taxable bond with a 35% Issuer Interest Subsidy from Treasury- Provides theoretical full value for tax-exemption, resulting in ~4.00% net rate- Public power is well positioned to enter the taxable market- Taxable investors understand utility credits and can compare you to IOUs

UVAAAA

NJ TPKA CAL GO

A

NY MTAAA-

SMUDA+ ILL Toll

AA-

CPS AA+

1.00%

1.50%

2.00%

2.50%

3.00%

3.50%

4.00%

4/15 4/20 4/23 4/28 5/1 5/6 5/11 5/14 5/19 5/22 5/27 6/1 6/4

Spread to 30YR Treas

Build America Bond Initial Treasury Spreads

PFM

36


36

• The Stimulus Bill and Build America Bonds, Examples:

- And positive side effects from $10+ Billion reduction in tax-exempt volume

Reduced Volume Helps Muni Market

3.50

3.75

4.00

4.25

4.50

4.75

5.00

4/15 4/22 4/29 5/6 5/13 5/20 5/27 6/3

Rates % Long Term Rates In Recent Months

AAA GO TREASURY

Date Issuer Rating RateTreas

Spread Net RateSavings vs Tax

ExemptSavings vs Tax

Exempt

04/22/09 CAL GO A2/A/A 7.43% 3.65% 4.83% ~0.60%

05/05/09 SMUD A1/A+/A 6.32% 2.25% 4.11% ~1.15% ~ $60 MM

06/02/09 CPS Energy Aa1/AA/AA+ 5.98% 1.45% 3.89% ~0.90% ~ $90 MM

Selected Build America Bond Results

PFM

37


37

• However, No Good Deed Goes Unpunished by the Financial Media

TaxpayersLose$328MillioninBuildAmericaProfitsBy Darrell Preston and Bryan Keogh

May 4 (Bloomberg) -- State and local public finance officials from New Jerseyto California rewarded investors with $328 million of instant profit by sellingdebt through the federal government’s Build America Bonds program.(continued)…

PFM

38


38

• Other Tax Credit Bonds Can Deliver Near 0% Financing- Renewable and conservation expenditures qualify for tax credit financing

- Investor received a Federal tax credit instead of interest from borrower

- Limited size and uncertain allocations are considerable drawbacks

- The current program partially rewards, but does not incentivize, renewables

- The tax credit market needs taxpayers

• DOE Loan Guarantees and Other New Technology Incentives- Value and availability of guarantees are uncertain

- DOE Nuclear Guarantees: from marginal, to valuable, to essential, to optional???

- If administered properly, it can be a powerful program

PFM

39


39

• House Financial Services Committee Proposals

- Municipal Bond Insurance Enhancement Act Treasury Dept. Office of Public Finance to reinsure up to $50 BN annually

- Municipal Bond Liquidity Enhancement Act Federal Reserve/TARP to lend money for the purchase existing variable-rate debt

- Municipal Financial Advisors Regulation Act Financial Advisor standards and SEC-registration

- Municipal Bond Fairness Act Require credit ratings system to reflect comparable risks of default

Some or All of This Could be Helpful

Some or None of This Might Actually be Implemented

PFM

40


40

• Investors Still Have Money on the Sidelines:- Educated, credit-sensitive institutional investors can help public power - Retail investors must be willing to come out of their shells

Credit Crisis Sends Investors Packing

PFM

41


41

• Preserving Credit Strength- Balance local, ratepayer and bondholder interests

- Do what you can, but no downgrades

- Credit spreads are higher than ever – Cost of Downgrade Studies

- Avoid the Straw That Breaks the Camel’s Back

Incremental action leading to a downgrade is VERY expensive

Downgrades take many years to reverse

Borrowing the extra $50 MM may raise interest costs on future $Billions

• Educated and Informed Public Power Constituents- Work with the Board to make informed decisions

- Helping ratepayers understand the value of their public power asset

PFM

42

Preparing for the Next Challenges

42

• Ongoing Concerns

– Federal Debt and the Impact on Interest Rates

– Economic Impact on Credit Ratings

– Headline Risk Effect on Investors

– Bank Credit Enhancement Market Taking Years to Normalize

PFM

43


43

• Ultimately, There Will Be a Price for All the Federal Help- Drastically Climbing Federal Debt and Guarantees

- Debt Up 27% in past 18 months: from $9.0 to $11.4 Trillion

PFM

44


44

• We May Just be Starting to Pay the Price- Normalization, or the start of a trend?

2.00

2.50

3.00

3.50

4.00

4.50

5.00

Sep-08 Oct-08 Nov-08 Dec-08 Jan-09 Mar-09 Apr-09 May-09 Jun-09

Rates % Sharply Rising 30-Yr Treasury Rates

PFM

45


45

• What Will Help Us Meet the Challenges

– The Tax-Exempt Product Will be Essential to Investors

– Retail Investors are the Backstop to Higher Rates

– The Bond Market Will Remain Open and Provide Access to Capital

– Commercial Banks Will Recognize Public Power Value and Safety

– Public Power Will Continue to Outperform Other Sectors