Initiatives of the Ohio Treasurer of State JD Pisula, Deputy - - PowerPoint PPT Presentation

Initiatives of the Ohio Treasurer of State

JD Pisula, Deputy Director of Investments Jon Azoff, Director of Debt Management Lizz Lewis, Director of Legislative Affairs

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Ohio Market Access Program

Credit enhancement program for Ohio local governments Helps municipal issuers lower borrowing costs Leverages the state’s credit rating (SP-1+) State agrees to purchase a participating note at maturity if municipality cannot retire the note For note issuances up to 1yr in maturity and up to $3MM in par amount

• Larger par amounts to be considered on case-by-case basis
• Both General Obligation and revenue-backed notes are eligible

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Ohio Market Access Program

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Highlighted Transactions

Maturity Issuer Par Type Yld at Issue Unenhanced Est Yld % Savings Annual Savings

6/13/2016 City of Hamilton $103,695,000.00 Revenue 0.43% 0.65% 33.85% $228,129.00 7/21/2016 Reading Community City School District $14,972,300.00 GO 0.45% 0.85% 47.06% $59,889.20 7/21/2016 Reading Community City School District $9,800,000.00 GO 0.45% 0.85% 47.06% $39,200.00 9/16/2016 Village of North Randall $2,308,500.00 GO 0.55% 8.00% 93.13% $171,983.25 9/22/2016 Village of Oakwood $2,621,500.00 GO 0.45% 0.90% 50.00% $11,796.75 10/6/2016 Madison Local School District $1,455,000.00 GO 0.55% 1.00% 45.00% $6,547.50 11/17/2016 City of Bowling Green (AMP) $2,235,000.00 Revenue 0.45% 1.00% 55.00% $12,292.50 11/22/2016 Village of Silverton $1,900,000.00 GO 1.25% 1.90% 34.21% $12,350.00 1/25/2017 Village of Timberlake $450,000.00 GO 0.70% 2.50% 72.00% $8,100.00 2/9/2017 Blendon Township $5,280,000.00 GO 0.70% 0.85% 17.65% $7,920.00 3/30/2017 Maple Heights City School District $2,211,000.00 GO 0.75% 1.10% 31.82% $7,738.50 4/7/2017 Village of Versailles (AMP) $840,000.00 Revenue 0.80% 1.25% 36.00% $3,780.00 4/28/2017 Village of Monroeville (AMP) $1,700,000.00 Revenue 0.75% 1.50% 50.00% $12,750.00 5/2/2017 Village of Holiday City (AMP) $3,000,000.00 Revenue 0.75% 1.50% 50.00% $22,500.00 6/21/2017 City of Garfield Heights $2,500,000.00 GO 0.80% 1.55% 48.39% $18,750.00 6/22/2017 Village of Newton Falls (AMP) $1,845,000.00 Revenue 0.80% 1.50% 46.67% $12,915.00 6/22/2017 City of Kirtland $2,000,000.00 GO 0.85% 1.15% 26.09% $6,000.00 7/5/2017 City of Uhrichsville $7,670,000.00 GO 0.90% 1.50% 40.00% $46,020.00

Ohio Market Access Program

Awarded the 2014 Small Issuer Deal of the Year by The Bond Buyer Village of Oakwood in Cuyahoga County issued 1-yr GO notes at 0.35% and saved

• ver $10,000 in annual

interest expense

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Visit www.tos.ohio.gov/OMAP for more information.

Ohio Bond Bank Legislation

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What is a bond bank? Current legislation (HB 435) How it could work with OMAP

State Treasurer of Ohio Ohio Pooled Collateral System (OPCS) Lizz Lewis, Director of Legislative & Policy Affairs

July 25, 2016

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Bank Collateral

• Changes in the State budget bill:
• Lien perfection now required
• Ohio Pooled Collateral System

implemented by July 1, 2017

• H.B. 374 created the option for rule based

collateral in Ohio

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Ohio Pooled Collateral System

Section I: Overview

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OPCS

• The Ohio Pooled Collateral System (OPCS) allows for

participating Financial Institutions (FI) to pool collateral for Ohio Public Entities’ deposits.

• The Treasurer of State (TOS) is the sole regulator and

monitor of the program.

• FI’s will chose to 1) participate in the pooling method

(OPCS) collateralizing at 102% or 2) not participate in OPCS and collateralize all public entities with specific pledge method at 105%.

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Monitoring Responsibility

• Specific Pledge Method

Responsibility for monitoring the FI’s compliance falls solely on the public entity who is required to maintain a record of all securities pledged at all times.

• Pooling Method

TOS is responsible for monitoring the FI’s collateral levels and

• compliance. The FI will be required to electronically report to the OPCS.

The FI may choose any eligible and approved collateral trustee and pledge a single pool of collateral through OPCS for all of the FI’s uninsured Ohio public entity deposits.

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OPCS Public Entity Responsibilities

• Public Entity are responsible for:
• Periodically reviewing and monitoring the reports

posted on the OPCS website related to its deposits of public funds.

• Verifying the accuracy and completeness of the daily

reports of its itemized deposits and reporting discrepancies to the FI directly.

• A public entity shall inform its FI of a significant change

in the amount or activity of its deposits within a reasonable time before the change occurs.

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Books & Records

• The FI will maintain separate, accurate, and complete records relating

to each deposit of Public Entity, each pledge of collateral, and each transaction related to a pledge of collateral.

• The Collateral Trustee will maintain separate, accurate and complete

records relating to each pledge of collateral and each transaction related to a pledge of collateral.

• The FI and Collateral Trustee will provide, upon request, to TOS any

additional information or confirmation regarding a deposit of public funds or a pledge of collateral.

• A Public Entity may review the records of the FI and TOS related to that

Public Entity deposit and collateralization of public funds in OPCS.

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OPCS Website

TOS will maintains the OPCS Website (“Portal”) for use by the FIs, Public Entities, and collateral trustees for the efficient and transparent reporting and monitoring of public deposits and corresponding collateral.

• TOS will build and maintain the Portal for the receipt, analysis, and

reporting of balance and collateral data will be available to the FI and public entities.

• The FI reports the Public Entities deposits daily to the program website.

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OPCS Website

• TOS receives the collateral detail from the collateral trustee and prices

the collateral daily. The Treasurer’s Office will approve all substitution and releases of collateral to the Collateral Trustee via the Portal.

• TOS compares the total market value of collateral pledged by the FI to

the total amount of deposits, plus any accrued interest, in the depository institution’s pool, less the applicable FDIC limits and agreed collateral haircut and reports the information on the Portal daily.

• The Public Entity is responsible to periodically review the balance of

their itemized deposits reported to ensure that it is accuracy and

• completeness. The Public Entity can review the FI’s total pooled

collateral amounts compared to the pooled deposits amounts on the

• Portal. The Public Entity will be able to set up daily or periodic

automatic email notices to assist with this requirement.

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Project Timeline

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Possible System Architecture

External Services: Indicative Sec Data Collateral Trustee Participating Banks

OPCS Portal

Bank Users Public Unit Users TOS Users Public Depositors of Participating Banks

Portal Architecture

Pricing IDC Bloomberg TMS Other Ratings IDC Bloomberg TMS Other Trustee 1 Trustee 2 Trustee 3 Trustee X Bank 1 Bank 2 Bank 3 Bank X OPCS Web Interface Manual File Upload Automated Daily Files Confirmation file & notifications/alerts BAU Collateral Activity Automated Daily Files Manual File Upload Confirmation file & notifications/alerts Public Unit 1 Public Unit 2 Public Unit 3 Public Unit X Automated Daily Files Bank Processes · FI opt in/opt out · FI file transmission · Missing FI file · Sufficiency remediation · Release collateral · Substitute collateral · Collateral maturity APS2 – Collateral Pool(s) Position/Security Golden Record, Asset Pricing, and Reconciliation Processes Public Fund Processes · Review OPCS reporting · Deposit attestation · Create/remove PU account Data Warehouse & Portal Processes Server Server Quantum Analytics – Collateral Pool Compliance Monitoring TOS Processes · Collateral percentage requirement · FDIC calculation · Collateral requirement calculation · Collateral compliance · Collateral reconciliation · Collateral valuation · Collateral sufficiency · Repair record BAU Collateral Processes Print file for non-active Public Units File Landing Pad Trustee Processes · Create/remove Trustee account · Trustee file transmission · Missing Trustee file Collateral Pricing Data

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Processes Overview

DRAFT

FI File Transmission Collateral Requirement Calculation FDIC Calculation Sufficient? Trustee File Transmission Collateral Compliance Collateral Reconciliation Collateral Valuation N Sufficiency Remediation Y

Start Start Legend Automated System Process Process reference Decision Point Manual Process Process Flow Sequence Number Manual System Process

PU Negotiated Floor Collateral Percentage Floor TOS Cushion Bank Monitoring Dashboard & Report Updates

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FI Opts Out FI Opts In Trustee Leaves OPCS Create Trustee Account Create/ Remove PU Account Deposit Attestation Missing FI File Repair Record Collateral Substitution

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Release Collateral Sufficiency Remediation Collateral Maturity Substitute Collateral Collateral Sufficiency

• File submission
• Deposit attestation
• Collateralization

sufficiency

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Questions

Lizz Lewis Director of Legislative & Policy Affairs Ohio Treasurer Josh Mandel

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