Why muni market diversity matters 



Lynne Funk (00:03):

Hello everyone and welcome to another Bond Buyer podcast. I’m Lynne Funk, Executive Eeditor at the Bond Buyer, and today I’m delighted to welcome the 2022 Freda Johnson Award for trailblazing women in public finance winners. The Freda Johnson Award is named for Johnson, a founding member of the organization and an executive vice president and public finance division head at Moody’s Investor Service For nearly two decades. It’s given annually to trailblazing women, one in the private sector and one in the public sector who exemplify the qualities the person brings to the industry. So today I am very happy to welcome Deborah Goldberg, Treasurer of the Commonwealth of Massachusetts as the public sector winner, and Emilie Ninan, Partner at Ballard Spahr and co-chair of the firm’s finance department. Welcome to you both.

Deborah Goldberg (00:51):

Thank you.

Emilie Ninan (00:52):

Thank you.

Lynne Funk (00:53):

So we have a lot to talk about today. I’m going to start off with what 2022 has been, in general for the markets is a challenging year, to say the least for all markets, but particularly for the muni market and the public finance industry. Treasurer Goldberg, would you want to start off and just talk about how the Commonwealth has weathered this year in 2022?

Deborah Goldberg (01:17):

Well, fortunately it has weathered this year well. In fact, we’ve been out in the market and issued over $5 billion this year and this week we’ll be back with a $700 million competitive sale GO credit and a $400 million of clean water trust. I have to say that in the fall we found it a bit challenging, but we still achieved all our goals. And, in fact, in August we did the largest goal, the largest deal that the Commonwealth has ever done with the $2.7 billion social impact bond, ESG bond. So I would say we’ve done okay.

Lynne Funk (02:00):

Right actually, so for our listeners, the Commonwealth of Massachusetts is also up for a Bond Buyer Deal of the Year award for that ESG, the largest social bond deal ever yet in the muni market. So listeners will find out this evening at the Deal of the Year awards where Treasurer Goldberg and Emilie will be speaking and accepting their awards, whether treasurer is going to get another award.

Deborah Goldberg (02:27):

Yeah, we’re kind of hoping it will be Massachusetts Night.

Lynne Funk (02:31):

To be determined for sure. And Emilie, this is a good pivot actually. One of the things that we’re looking at, while Massachusetts is issuing a substantial amount of debt, issuance in general has been down in 2022 substantially because of the market turmoil, because of macroeconomic challenges and geopolitical turmoil. From your perspective, how has this year with lower issuance levels and uncertainty impacted how you approached your work?

Emilie Ninan (03:00):

Well, we have over 120 lawyers practicing across a wide range of public and private debt markets and certain equity markets. So that gives me good visibility into the activity level across markets and the thinking of a fair number of market participants. And we see our job as lawyers to guide clients through successful transactions, regardless of market conditions. So in order to do that, we have to have a comprehensive understanding of two things: our clients’ business and what’s happening in the market. And that means taking the time to listen to our clients and to constantly monitor regulatory developments, the political landscape and key market indicators. So as factors such as inflation, interest rates and supply issues raise concerns about a recession, we galvanized our resources in a multi-practice distressed assets and opportunities initiative. And we did something similar during the 2008 downturn and it really helped our clients reach their long- and short-term business goals.


And now we’re seeing definite signs of capital being constrained as a wide range of parties slow or stop their investing or lending activities pending some clarity as to where things are heading. A little different than Massachusetts, I think, as Deb described, but our distress assets and opportunities team brings together lawyers who focus on public and project finance, commercial lending, distressed M&A loan servicing, municipal recovery distress real estate in bankruptcy among others. And so with each of us keeping a finger on the pulse of developments in our respective areas and sharing that information and insight, we’re able to advise clients earlier and more completely. We’re also offering educational sessions to clients on topics relevant to specific challenges we are seeing. For instance, we’re talking to clients about creditor protections and remedies, workouts and restructurings. We represent trustees, bond purchasers and bond insurers on municipal bankruptcies.


And we’re actually currently representing Chester, Pennsylvania’s debtor and its Chapter 9 bankruptcy. In addition, our municipal securities enforcement group meets weekly with in-house clients to discuss current regulatory and compliance issues and critical enforcement cases. And we’re also advising institutional investors on troubled municipal bond financings and capital recoveries, including the energy infrastructure and government sectors. We talk to them about risk mitigation strategies to position investors for stronger recoveries when projects go over budget, off schedule or face operational challenges. And if they do fall into financial operational distress, we’re prepared to jump in and exercise effective remedies for capital recovery. So that’s why it’s good for us to have such a deep bench in finance for some clients. This is a time of tremendous opportunity. Others will struggle to keep critically important projects moving forward. So regardless we’re prepared to help.

Lynne Funk (06:10):

Interesting. No, that’s great. I’ll pivot back over to Treasurer Treasurer Goldberg and talk about that Deal of the Year that you’re up for. And that was the $2.7 billion social bond deal. Massachusetts has been a leader throughout the years in bringing new types of muni debt into the market. The state was the first to issue a green bond, I believe back in 2014.

Deborah Goldberg (06:39):

It was the first green bond issuer back in 2014 and bookmarked by the largest social designated bond deal, the $2.7 billion, which had some very unique qualities and was a fascinating deal because it required coordination from multiple departments that are not usually involved in debt issuance, like the division of unemployment insurance, so executive offices and our offices. And what it did was covered all the debt that we had accumulated in that trust fund by people affected by COVID 19. The other thing that made it very interesting is that it was a taxable deal. So it garnered a lot of interest from international investors and non-traditional investors. And with it coming out in a challenging market it was pretty amazing how well it did. And also then was such a landmark deal because it was absolutely an ESG deal. And we know there’s a lot of conversation about ESG and we’re happy to have that conversation because we definitely feel it is something relevant and important in the business and investment community.

Lynne Funk (08:03):

Certainly. And I think one of the things that this market is seeing, the ESG growth is very evident. And while perhaps there’s not broad pricing differentials just yet, there’s definitely broadening base. And as you mentioned, the international interest in the deal I think is definitely noteworthy. And to bring a taxable deal as we went back to issuance this year being a little bit lower, taxable issuance is down 50% to, so to bring this kind of deal of size and magnitude in this market is definitely noteworthy.

Deborah Goldberg (08:40):

Interesting is what we include in our disclosure documents is we partnered with UMass Donahue Institute to have a socioeconomic report to expand and augment our discussion of key social, environmental, and economic topics in the Commonwealth. And I think it did probably did what it needed to do, which is to explain the very real connections on those issues.

Lynne Funk (09:06):

I think a lot of that is with ESG is telling that story, explaining why so many folks will say in the industry, well, are the original ESG impact green bonds? But a lot of times it’s telling that story. So Emilie, that might be a good pivot to you in terms of, I know you work you’re interested in working on ESG and and P3s. Do you have any particular deals that you worked on this year that you think are noteworthy?

Emilie Ninan (09:35):

Yeah, it’s amazing how different this year is from last year in terms of volume and what we’ve been able to get closed. So at the beginning of the year we were able to squeeze in some refundings, but basically given where rates are now, refinancing usually don’t make economic sense. On the P3 side, our group is working for the public owners on highway and bridge improvement projects for DOTs in Georgia, Nebraska, Pennsylvania, and Virginia, as well as for the New Jersey Transit. We also do work for sponsors and investors motivated in part by the infrastructure investment and Jobs Act on projects in Louisiana, Maryland, and New York. On the ESG front we serve as primary P3 council to the University of Florida for development of a new central energy plant on its Gainesville campus. And that’s designed to maximize future energy efficiency while fulfilling their growing needs.


Also mention, our bioenergy project finance practice is a national leader in financing new technologies to convert nearly every conceivable form of waste into a valuable reuse, including expanding various sources of bioenergy while reducing landfill waste and promoting recycling. And we also offer significant debt in essential workforce housing to maintain sustainable communities. And I’ll just say ESG is not new to the public finance practice at Ballard. I know there’s been a lot of discussion about it recently but for more than a decade we’ve been curating and hosting a green infrastructure conference, and that’s a well-attended interdisciplinary meeting between our public finance and environmental groups. And with continued focus from investors and clients on environmental, social and governance issues, we expect to continue to work on green bonds, social bonds, and a range of other matters that fall into the ESG category, even if they’re not labeled or necessarily sold as such.

Lynne Funk (11:44):

Great. And we’re going to take a short break, but we’ll be right back. And we’re back with Massachusetts Treasurer, Deborah Goldberg and Ballard Spahr’s Emilie Ninan. So I’d like to ask both of you, but I’ll start with Treasure Goldberg. Are there any initiatives that you’re working on perhaps in this day that you think the public finance community should be aware about?

Deborah Goldberg (12:07):

Well, as I mentioned earlier, a distinguishing factor is our innovation and leadership in particular when it comes to ESG. And it’s not just ESG in our bond issuance, but we have an unusual partnership with MIT’s Aggregate Confusion Project with the pension fund. So our pension fund was up over about a hundred billion, it’s now about $92 billion, given the volatility in the market. But we have partnered with the Aggregate Confusion Project to reduce the ambiguity around ESG ratings and approve, improve the quality of ESG measurement and decision making in the financial sector. And so I’m extraordinarily excited about this effort because it addresses so many of the things that others have challenged about ESG considerations. And in fact, as I was sitting here, I was thinking about that Emilie as you spoke, how there are those who are even challenging law firms for working with clients that are considering ESG.


And so consequently, we feel our project, the Aggregate Confusion Project, will provide enormous data, not unlike the data that emerged eight to 10 years ago that supports the reasons why it’s so essential to increase diversity in firms, diversity on boards, diversity in workforces, which shows it then translates to the bottom line for increased profits and innovation in the workplace. And so I think that that’s one of the very exciting features. And in we are actually creating a subcommittee to go along with our investment committee and our admin and audit our ESG committee to advise the other committees, the board, the investment committee on those kind of considerations. And it will be utilizing the data that will be coming out of this project very shortly.

Lynne Funk (14:14):

And Emilie, are there any areas in the public finance industry that you’re working on that are perhaps more forward looking or exciting that we should be thinking about as well?

Emilie Ninan (14:25):

Yeah, a few thoughts here. First, the bipartisan federal Infrastructure Funding Law amended the tax-exempt bond provisions of the tax code to enhance financing options available to state and local government to address infrastructure needs. So we see opportunities there sponsors, investors and public owners are thinking about how best to tap into a policy move and to connected autonomous vehicles and to anticipate the charging infrastructure and really the transformed nature of an electrified right of way. And as you may know, the US DOT is seeking national electric vehicle infrastructure plans from all 50 states, which is very much akin to thinking about establishing the first interstate highway system on second bioenergy will continue to be an exciting area going forward. We’ve been working on some of the largest waste to energy projects in the industry in Nevada. We’re advising on the financing for the world’s first commercial scale plant to convert household garbage into low cost zero carbon transportation fuel another project financed recycling facility to process solid food waste and other solids to produce fertilizer, renewable electricity and renewable natural gas.


In California, airlines have committed to achieve net zero carbon emissions by 2050 and the clean skies for tomorrow coalition has set a target of 10% for sustainable airline fuel adoption by 2030. So that emergence of necessary legislation and the development of this alternative to convention jet fuel from woody biomass or other organic materials is another area we’re keeping an eye on. And lastly, and then we’re thinking about technology how we can use it to increase efficiency in delivering client service. Those days of hard copy bound values for closing transcripts are long gone. Actually CDs are gone as well. We deliver all of our closing transcripts through an Extranet site. That’s also how we manage due diligence. We have a terrific client value and innovation team. In fact, they were just named best business team by American lawyer and they work with our lawyers and our clients on alternative fee arrangements as well as technology and business solutions to manage our clients’ legal spends.


And we use document coding where we can to better ensure consistency and drafting. We create the spoke client sites so they can monitor the status of their matters in real time. We also are tracking cryptocurrency and blockchain developments. Despite the volatile recent history, they seem to be making their way into mainstream finance. And blockchain in particular has been used by some municipalities for functions such as recording documents and tax collection. So we consider ourselves a relatively early innovator in business technology in the legal industry, and we’re using it every day to increase transparency, efficiency, and collaboration with clients and technology changes quickly. So looking forward there’ll be even more opportunities for efficiency and cost savings there.

Lynne Funk (17:54):

So I wanna pivot over to diversity in this industry. You’re both being named the Freda Johnson Award winners as Trailblazing Women in Public Finance. And we know diversity is much needed for the public finance industry. We know there’s been some progress, more women in positions of leadership in both politics and finance. But I want ask you both from your seats, what does this, what does muni industry need to do better, more of, and why should it? And Treasurer Goldberg, why don’t we start with you? You kind of touched on some things you’ve already been working on, but let’s get more specific.

Deborah Goldberg (18:32):

Well as I alluded to in answering a different question about ESG and looking at it in terms of diversity and inclusion, which wasn’t a term when I first started this work. One of the reasons it was so critical to me to get into these fields and lead the way on breaking down barriers for women and for people of color is that the data is there — whether it’s McKinsey, whether it’s Pew, whether it’s State Street — that organizations are more successful when they include all ways of thinking and all types of people. I’m originally from the grocery business and when you reflect, when your boardroom reflects your customers and your executives reflect your customers, you are more attuned and more able to be financially successful. It impacts the bottom line. But that is true for every single organization. And whether it is the financial services areas and the private equity folks and tech, which we have a lot of here in Boston those have been very closed door for women.


And when women get in they find themselves off the track and into marketing and investor relations jobs as soon as they start thinking about having families, or at least that has been the case going back. I mean, I reflect upon my 25th reunion at Harvard Business School and extremely talented, very capable women who had all had to veer outta those fields as it became more and more difficult to survive for a range of reasons. So this was a top priority to me when I arrived, starting right at home, I call it, we did a wage audit throughout. I have 800 employees and we equalize pay for women and people of color. We led on diversity. My first when I arrived the proxy voting guideline for the pension fund was we didn’t vote for a board if it didn’t have one woman and one person of color.


Today our guideline is we don’t vote for a board and we invest in over 11,000 companies if they don’t have 35% women. And I’m gonna underline and 35% people of color. Why? Because it’s a business imperative, not because I’m doing social action, that may be a very good outcome, but because it means that they’re taking their businesses seriously. So I put the, as an appointing authority, I put all these strategies into action because selfishly it creates success with those who we work with and it is inclusive. And in Boston and in Massachusetts, and I know Emilie and I think it’s even more so in New York, in order to be comfortable and live well, the high paying jobs are often out of reach for many who are capable of accessing them. So in 2016, I started the Women plus Finance Fellowship. It’s the first of its kind sponsored by a government organization and it’s open to women and non binary undergraduate and grad students who reside here in Massachusetts.


And what we do is we place them first of all, either in debt management, the Massachusetts School Building Authority, the Mass State Lottery Commission, the state retirement board or the pension fund, and we have mentoring programs both internally and externally. And then the cohorts go on to continue to mentor each other. Why do we do this? Because women often need support to continue to take on those challenges, break through those barriers, including myself. The first thing I said when I heard I was getting this award is I said, really? Why me? And they said, men never say that. Of course they don’t. And I could go on and on talking about stories of ways in which I thought I couldn’t do something that I maybe I wasn’t capable. And that’s from societal barriers. I don’t see this as much. And although Massachusetts now has five outta six of its constitutional officers or women, were not the norm.


And truthfully in the legislature, the numbers in the other direction are staggeringly low. So you’ve just gotten a few unique per people who have been willing to take this on. But diversity is very critical for success and for everyone’s success. And in today’s financial world, it’s necessary. So that applies not just to issuing bonds and doing munis, but it applies to everything. My head of debt is a woman. I must share with you, she’s a black belt in karate and she’s fabulous at her job. And I don’t think we would do as well in Massachusetts if it weren’t for her cross capability. She even serves locally in their hometown. So that is just a quick overview on why I think this is so important.

Emilie Ninan (24:15):

Well, it’s great to hear all that you’re doing and what I heard through all of that is that you have to really be intentional about it, whatever you’re doing in diversity, equity, and inclusion. So maybe I can tell you Lynne and Deb and everyone listening, just what has worked for us at Ballard, and maybe there are some lessons there that other participants in the industry can learn from. We’ve shown that we can accomplish increased diversity with the right commitment and effort, and that includes a commitment to inclusion and equity at Ballard. Equity means making resources and opportunities accessible to everyone. And that means identifying and removing barriers to participation and advancement. Inclusion is the effective integration of people from all backgrounds. So we have 30% equity partners that are women which has earned us the title earlier this year of ceiling smasher by Law 360.


And that puts us in the top eight of law firms with more than 600 attorneys at Ballard. We provide professional development support designed to bolster the trajectory of women and people of color into key committee and leadership roles, both inside the firm and externally. So women comprise 55% of our firm’s elected board, 50% of legal department chair positions, including myself. And on the partnership compensation committee, 40% are women including 20% women of color. So our commitment to diversity is not new. We’ve had the same chief diversity officer for 14 years and a very vocal supporter in the firm’s chairman. We’re also Mansfield certified. So similar to the Rooney Rule, we require diverse candidate slate, be interviewed for every open position. And we have formal and informal mentoring programs that we take very seriously at the finance department level, which is my department. Every one of our practice groups has a leader that is either a woman or person of color.


And despite the fact that Ballard’s first female partner in 1971 was a public finance lawyer, 15 years ago when I joined the firm, there was no public finance female partner at Ballard. So today I’m proud to say that at least half of our partners in public finance are women. And that diversity of perspective helps drive our success as a top public finance firm in the United States. But that didn’t happen by luck or happenstance. In terms of what the industry can do to promote diversity one relatively easy thing I think is to refer business to minority lawyers or bankers and majority firms, if they don’t have the work, which is how you measure success in an organization, then they’re not gonna be there. And diversity begets diversity. If you don’t have one or two, you’ll never get to critical mass. So it’s not surprising that there’s a correlation between diversity and leadership and diversity on their teams.


Anyone can claim a commitment to diversity, but if that commitment isn’t demonstrated, then it’s not a real priority. So it’s important for majority firms like Ballard, which has been doing the hard work, diversity, equity, inclusion to be acknowledged for their diverse teams by issuers and other clients, either by taking that into consideration when assigning work or at least giving us credit for that in an RFP process. Currently we have to partner with a minority firm to get diversity points. Don’t get me wrong, we’re happy to partner with minority firms when appropriate. We do it and we do it well. But it should not become a way for majority firms to outsource their obligations to promote DEI within their own organization As to why the industry should wanna do this, I think that you did a good job of talking about the business case and the benefit to everyone in an organization and how it is business imperative.


And I hope we don’t have to rehash the business case for diversity in the year 2022. This is a conversation that’s been ongoing for the 20 plus years I’ve been in practice. There are certainly studies and data out there proving diverse teams produce the best outcomes. And diversity includes everyone, includes white men, includes people of different genders and races, members of the LGBTQ IA plus community and others. And people with different backgrounds and experience think in different ways. And diverse teams offer broader perspectives and are more likely to solve problems, be creative, be innovative, and be successful. And top of that, I think this was mentioned previously, McKinsey report found more diverse companies perform better financially. So the question is not why, but why not? When at Ballard we’re committed to increasing equity and inclusion because it creates a diverse and well-rounded law firm. It unlocks the potential value of diverse talent and it delivers superior results for our clients. All of that is what the public finance industry as a whole wants more of or it should, especially in these challenging economic times. So a commitment to diversity, equity, inclusion is not about the “right” things. It’s good business.

Lynne Funk (29:47):

Well, thank you both for what is very clearly a deserved Freda Johnson Award and what you just laid out over the course of both of your careers. It’s really impressive and exciting to know that we have people like you in the industry being leaders. Is there anything you’d like to leave the listeners with? And it can be any parting words, any thoughts on going forward into 2023? We know it’s gonna be challenging. How should the industry approach the coming year?

Emilie Ninan (30:22):

I’ll just say a word about staying nimble and challenging times. I mean, as I mentioned before, we keep our finger on the pulse of the market, including features of deals that are being closed, bond rating changes and regulatory and legislative initiatives at all levels of government to keep clients up to date with the latest information and data. And in these challenging times, we have become even more proactive and collaborative in monitoring changes and developments in the economy, regulatory climate, federal incentives, and keeping clients apprised so they can take appropriate measures. And after we share this information with issuers, we encourage them to stay in touch with potential conduit borrowers and their footprint and to make adjustments to better facilitate conduit issuances. And that could mean tweaking an application process, looking at meeting schedules or even pricing. Now main focus for me in managing the finance practices is to be forward looking in terms of trends and expected deal activity so as to position our practices to be relevant to clients no matter what the market conditions are. Another focus is to maximize collaboration and training across our practices to ensure that our teams are best suited to advise our clients in any area of finance. And both of these focus areas are more important than ever and will remain critical in 23. For any company or firm wanting to succeed.

Deborah Goldberg (31:53):

I would recommend approaching the coming year in the very same way. I always approach even years that are perceived as great years, years. I always believe in proceeding cautiously. However, in terms of women in diversity, which I wanna layer back in when we have tougher times women seem to not fair as well. It’s easy for organizations and even in public finance and the like to advance women and others when they’re roaring along doing so well. But if there’s constriction in the industry, women tend to be squeezed out more quickly. But in terms of philosophically how to address a more volatile markets, that’s something that we’ve done in all of the areas, whether it’s throughout debt issuance or it is through our investments in the pension fund. We’ve always approached everything as if there could be extreme movement at some point and we have to be prepared for it.


So we’ve instituted very strict fiscal policies to ensure that the commonwealth is stable. We were one of the few that during Covid did not have to take advantage of the facility with the treasury the US Treasury, and we were able to get through Covid, believe it or not, with continuing to add to our rainy day fund. And then when I was asked when things settled down, whether they could utilize the rainy day fund in the budget, and I said, this is what I was talking about, it is raining, but in fact we’ve continued to add to the rainy day fund. So I believe if you approach everything with an understanding that what you saw today may not be what you see tomorrow, and that’s how you run your business at all times. Volatile times can actually provide opportunities and you can get through them as well as possible and fair as well as possible. And that includes strategies for women breaking through barriers. One thing I always say to women is persevere. Don’t let them get you and hang in there.

Lynne Funk (34:18):

Well, thank you both so much for joining me today on this podcast. Congratulations to you both on your Freda Johnson award, very well deserved very obviously, well deserved. We look forward to celebrating with you tonight at the Bond Buyer’s Deal of the Year Award Ceremony, you and all the other trailblazing women that the Northeast Women in Public Finance are honoring. Thanks again and we look forward to talking again

Deborah Goldberg (34:44):

Soon. Thank you so much. And Emily, I look forward to seeing you.

Emilie Ninan (34:48):

Likewise, and thank you Lynne for including me in this conversation.

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