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By: Georgina Walleshauser
With the SLGS window currently closed and expected to remain so for several more months, issuers of current refunding transactions should consider using open market securities escrows. In recent years many issuers correctly believed that for shorter dated escrows it was often more cost effective to gross fund the escrow and close in cash. In the current market environment, due to the run-up in rates at the very short end of the yield curve, even smaller sized escrows with short maturities can realize savings versus cash after fees. With 30-day treasury bills currently yielding ~2.30% – 2.40%, we estimate that even an escrow as small as $5,000,000 would still produce several thousand dollars in savings after the cost of fees. Naturally longer and/or larger escrows will benefit even more. We strongly recommend any issuer of current refunding bonds to explore taking advantage of high-yielding short-term treasury securities. Blue Rose would be happy to provide an escrow indication to anyone considering doing so. Please contact your Blue Rose advisor for more details.
About the Author:
Georgina Walleshauser, Analyst
Georgina joined Blue Rose in April 2017. She is responsible for providing analytical, research, and transactional support to senior managers serving higher education, non-profit, and government clients with debt advisory, derivatives advisory, and reinvestment services. Georgina can be reached at gwalleshauser@blueroseadvisors.com.