• Photo of Financial Advisor
  • Contact Us

    Hoboken Office | 201-656-0115

    Medford Office | 609-953-7555

    Pennsylvania Office | 610-326-4900

  • Structured Products

    The use of derivatives in the municipal finance sector has moved well beyond traditional synthetic fixed-rate financings to complex structures that require more than the ability to input a structure into pricing models.

    NW Financial has served as a Financial Advisor on over $5 billion in notional value of swap transactions. We have advised clients on a broad variety of swaps and our ability to model market-sensitive conditions has resulted in millions of dollars of savings for our governmental clients.

    The types of transactions on which we have advised include:

    We have also assisted our swap clients in analyzing and evaluating their swap portfolio including:

    Swap Termination Opportunity

    NW Financial was among the first to identify a swap termination opportunity that resulted in savings on interest costs by choosing to issue fixed-rate debt to replace the SWAP rather than to renew high-cost letters of credit that supported variable rate demand bonds on the short end of the yield curve. NW Financial’s constant market monitoring identified this opportunity early, including pricing the cost of terminating related swap transactions, which helped our client not only achieve debt service savings but also improves its credit rating profile from a swap exposure and rate risk point of view.

    Swap Payment Suspension

    NW Financial recently assisted a client’s staff in their evaluation of the benefits of suspending payments on their constant maturity swaps, which had a significant positive mark to market, in order to capture that benefit and reduce risk for a period of years.
    NW Financial has extensive experience with complex derivative products.

    NW Financial has executed over $2.5 billion of swaps and derivatives on behalf of its clients but has also rejected over $10 billion in proposed transactions that were not in the client’s best interest. We have also undertaken extensive sensitivity analysis for our clients on market movements and basis risk prior to recommending a particular product. NW Financial utilizes both proprietary and non-proprietary models to test trade pricing and assure market transparency. Our software includes the Black 76 model for pricing products such as options and swaptions. As a result of our in-depth analysis, we have been able to identify “hidden” profit components in the proposals that were not known to the proposer’s investment banking staff, including internally adjusted “vol” pricing and off-market discount rates. We have also been able to negotiate flexibility into trades, such as “greater than” payments when leaving one index and moving to another (e.g. monthly to constant maturity). As part of our advisory role, we provide a Fairness Opinion, analysis of impact on bond yield, post pricing report, and monthly portfolio monitoring.