The Depository Trust & Clearing Corporation (DTCC) today congratulated itself on processing the largest municipal bond underwriting in its history: a $10.965 billion bond from the State of California. It comes just a week after DTCC closed the second largest single municipal bond offering in its history – a $10 billion State of Illinois GO Pension Fund Taxable Series 2003.
New issues such as the State of California 2003 Revenue Anticipation Warrants – underwritten by lead managers Bear Stearns, UBS Financial Services, Morgan Stanley, Salomon Smith Barney, Zions First National Bank, Goldman Sachs and Lehman Brothers – are initially processed and distributed (including cash payment) to brokerage firms by the DTCC. Its DTC depository arm handles he processing of 99 per cent of all municipal issues in the U.S.
The Illinois issue was the first global municipal issue, since the State of Illinois has made an application to list the bonds on the Luxembourg exchange. The issue can be held at Clearstream and Euroclear, in addition to DTCC.
“As state governments deal with a difficult budget environment, they are borrowing more money to deal with financing problems or shortfalls,” says Denise Russo, director, Underwriting, at DTCC. “These two record high bond issues within a week are indicative of the increasing borrowing requirements that states and municipalities are facing.”