MainLine West Municipal Bond Specialists Offer Institutional Access
1. MainLine West
Introduction for clients
specialists in municipal bond investments
2. municipal bond specialists
products and services
A broker/dealer focusing on institutional An alternative investment opportunity
level service for our clients. providing high tax-exempt income.
MainLine West
specialists in municipal bond investments
3. broker/dealer services:
institutional level access for investors
trust
opportunity value
• 70 years combined municipal
• Diversification of credit • Complimentary portfolio review
bond market experience
• Risk management • Institutional access = better
• Transparent fee structure
bonds at better prices
• Principal protection
• Competent, attentive service • Client-focused philosophy
• Tax/income considerations
• Fair and modest markups • Clear and concise reporting
• Unique duration/maturity
• Preferential bond selection
MainLine West
specialists in municipal bond investments
4. broker/dealer services:
institutional level access for investors
municipal bond issuers
MainLine selects bonds from
among those offered by 50
underwriters with whom we investment bank / underwriters
have relationships for the most Sell bonds on behalf of issuer to MainLine West & Institutional Investors
attractive credit quality and price.
MainLine bond selections are not institutional brokers
mainline west
available to all retail brokerages. - Purchase bonds from investment bank @ 98.5
municipal securities
- Offer bonds to retail brokerage @ 99.5
We have access to the best bonds - Purchase bonds from investment bank @ 98.5
available. - Sell bonds to MainLine client @99.0 (0.5 mark-up)
retail brokerage
Our mark-up is modest compared
to retail, and based on a price less - Sell bonds to retail client @101.5
than available from retail.
mainline west clients retail clients
Bonds we select are desirable.
$1 million par purchase $1 million par purchase @ 101.5
They are attractive to retail
Total cost to acquire: $990,000 Total cost to acquire: $1,015,000
brokerage as well as our clients.
UP-FRONT COST SAVINGS FOR MAINLINE CLIENTS = $ 25,000
MainLine West
specialists in municipal bond investments
5. broker/dealer services:
helping optimize the client’s portfolio - example
Portfolio and Investor Profile: National investor, state of residency has no income tax, a Yield % of Portfolio Credit Quality &
portion of the portfolio is invested in tax-exempt mutual funds . Portfolio value = $10MM Increase Portfolio Pick-up Comments
Issue: Bonds are from high income tax states, which make good investment sense for a resident of
that state. This national investor does not enjoy the after tax advantage, and lose income as these
Some improved
states provide lower yields due to high in state demand. 0.20% 15.65% 0.02%
from A to AA
Enhancement Opportunity: Substitute specialty state bonds for like quality national trading states.
Issue: Not taking advantage of bonds good for non-AMT eligible investors.
All credits AAA
Enhancement Opportunity: Introduce AMT GNMA backed housing bonds. These bonds are AAA 1.25% 10.00% 0.14% and GNMA
rated, and work well for those investors not eligible for AMT. Credit quality is highest quality, and backed
housing programs have not suffered from the sub-prim
Issue: Mutual Funds charge an annual expense fee, that hurts investor’s returns. This investor was
paying roughly 45 bps on 25% of his portfolio for mutual fund services.
Fees to hold
0.45% 26.05% 0.14%
portfolio avoided
Enhancement opportunity: Replace mutual funds with direct owned bonds. Mainline believes an
investor should only pay to buy bonds, and not hold them.
30 bps = $30,000
51.7%
TOTAL FOR ALL ENHANCEMENTS
ANNUALLY
MainLine West
specialists in municipal bond investments
6. municipal bond borrowers
*
State Governments/Agencies
*
Local Governments
Highest Credit Quality &
The MainLine West General Financial Flexibility
focus is on high quality Obligation Counties Cities Schools
Bonds
*
credits from state and Public Enterprise
local government GO
credits, and high
Airports GNMA/GSE
Electric
quality, essential service Mass
Water &
Utilities Transit
Sewer
revenue bonds issued
by the public sector, Not-For-Profit Corps
Revenue
including unique Bonds
opportunities in GNMA Universities
Hospitals
/GSE bonds.
For-Profit Corps
Less Credit
Quality
Airlines Solid Waste
Developers
*MainLine focus
MainLine West
specialists in municipal bond investments
7. bond offering examples
tax equivalent yield examples
Massachusetts Water Pollution
$408,665,000.00
Federal Taxable MA Taxable
Equivalent Equivalent
Ratings Maturity Amount (mm) Coupon Yield Yields* Yields*
Moody's: Aaae 5 years 7,140 5.000 2.460% 3.78% 4.12%
S&P: AAAe 10 years 11,515 5.000 3.470% 5.34% 5.87%
Fitch: AAAe 15 years 17,630 5.000 4.330% 6.66% 7.25%
Typical GNMA Housing Authority Example
Maturity Taxable Equiv
Maturity Amount (mm) Avg Life Yield to AVL Yield to AVL
5 years 1,000,000 5.0 yrs 5.0% 4/1/2014 7.77%
MainLine West
specialists in municipal bond investments
8. client-focused communication
keeping our clients informed
Muni AlertsSM provide an overview and
detailed yield and credit quality
information for municipal bond credits
recommended by the MainLine investment
team for inclusion in a client portfolio.
The MainLiner Blog
The MainLine West team works
in the municipal bond market all
day, every day. We understand
it, and we are experts. Activity
in U.S. and world markets affect
municipal bonds, and we are
busy interpreting and adjusting
our strategies and
Advisory NotesSM are a series of
recommendations for our
free client documents providing clients. We share our thoughts
important information to clients and commentary throughout
regarding investment strategies the day on our blog. Join us
and tax considerations. and share your comments on
our thoughts and opinions.
MainLine West
specialists in municipal bond investments
9. complimentary portfolio review
understanding our client’s needs
Our complimentary portfolio
review provides a comprehensive
analysis of current holdings:
• Cost for executing trades
• Diversification elements
• Credit quality
• Tax efficiency
• Investment strategy
• The MainLine Advantage:
Take advantage of our
expert advice and
recommendations to
optimize value, tax
advantage, and minimize
risk exposure.
MainLine West
specialists in municipal bond investments
10. personalized pro forma
helping optimize the client’s portfolio
This is a personalized proposal
based on our expertise and your
specific investment objectives
and specifications:
• Investment horizon
• Tax status
• Risk tolerance
• Liquidity preferences
• The MainLine Advantage:
Take advantage of our
expert recommendations
using investment themes
that are aligned with your
needs and constraints.
MainLine West
specialists in municipal bond investments
11. tax advantaged opportunity fund
introduction to mainline fund investments
An alternative investment opportunity providing high tax-exempt income.
A consolidated vehicle to take advantage of:
• Current relative value of municipal bonds
• Structural imbalances in the municipal market
Efficient use of low leverage = 8 – 10% federal tax-exempt income*
Unique private equity capital structure
• Illiquid long term commitment
• 30% reserve deleveraging capital
*Investment of capital in our Tax-Advantaged Opportunity Fund includes risk. When evaluating the fund as a part of your investment strategy, you should understand the
potential risks that could lead to a loss of some, or all, of your capital investment. There is no assurance that the fund will achieve its objective. Past performance does not
guarantee future results. A prudent investor always considers the potential risks as well as the rewards before proceeding. There are interest and management fees
associated with participation in the fund which will be fully disclosed to you prior to your commitment.
MainLine West
specialists in municipal bond investments
12. what mainline can do for you
your partner for the journey
A broker/dealer focusing on institutional An alternative investment opportunity
level service for our clients: providing high tax-exempt income.
• Top selection of bonds • The best price • Higher income per $ invested
let the mainline advantage enhance your investment portfolio:
Prudent monitoring and proactive response in today’s volatile marketplace
A team of professionals with over 70 years of combined experience
Focus on the long-term, not reacting to short-term market uncertainty
Clear, concise, client-focused thinking
MainLine West
specialists in municipal bond investments
13. the mainline west team
years municipal bond investment experience
70
Brad kreidle, founder and president
•20 years as municipal professional, including head trader at George K. Baum
•Leader in establishing municipal arbitrage strategies
•Leading market maker in tax exempt GNMA municipal bonds
•Instrumental in developing and maintaining the leading database for prepayment analysis
Mike maciolek, cfa, senior vice president
•16 years experience as municipal professional, including First Data Corporation
• Managed $12 billion muni bonds, $7 billion fixed income swaps; orderly liquidation
•Analyst at Oppenheimer Funds; assisted in portfolio management of $2 billion
tax-exempt money market funds
MainLine West
specialists in municipal bond investments
14. the mainline west team
years municipal bond investment experience
70
Roger dalen, senior vice president
• Over 30 years experience in investment banking
• Specialist in quantitative municipal finance
• Vice President and Trustee at Capmark Finance; responsibilities included hedging
$1.5 billion portfolio of non-rated multi-family housing revenue bonds
• 13 years as CFO of Kirchner, Moore & Company
Dennis kortman, cpa, cfo, senior vice president
• 30 years partner at national CPA firms; in charge of investment banking and
accounting auditing practice
• Served on AICPA’s subcommittee on Stockbrokerage Accounting and Auditing
• Managing Director and CFO of investment banking firm Hanifen, Imhoff, Inc.
• Consultant to brokerage clients regarding FINRA and SEC rules and reporting compliance
MainLine West
specialists in municipal bond investments
15. MainLine West
street . suite 1500
700 17th
denver . colorado . 80202
www.mainlinewest.net
the journey is the destination