Quantitative Consulting
Quantitative Consulting helps issuers of debt
make informed financial decisions by quantifying the impact of policy
and transactions. The group addresses a range of policy and decision
support needs of the typical CFO responsible for a complex portfolio,
often finding hidden opportunities to improve a client’s financial
position. Quantitative Consulting also provides highly regarded structuring
and transaction support.
Over 25 years of serving public and private issuers of asset backed
debt, Quantitative Consulting has perfected its models and methodologies.
Today the group has access to a full suite of proprietary software
tools together with up-to-date portfolio data required to effectively
advise the largest and most complex state housing finance agencies.
These data and tools serve to:
- Answer the “what must?” questions – record
and interpret a description of all of the contract rules and tax
compliance obligations themselves, and determine precisely what
current transaction activity the issuer must undertake. For example,
we routinely utilize a computational system which grabs a description
of each of the issuer’s bond redemption requirements from
a database (including contract obligations to call “super-sinker” bonds,
tax obligations to call from 10 year rule restricted principal,
and cross-call strategy rules for calling bonds with discretionary
amounts) and, given the current inventory of recoveries of principal,
tells us precisely which bonds to redeem, on a series-by-series
and maturity-by-maturity basis.
- Answer the “what if?” questions – simulate (based
on the record of prior transactions and applicable rules) a long
term sequence of future transactions under the Resolution – a
forecast of what is going to happen, reflecting alternative sets
of assumptions with respect to today’s transaction and tomorrow’s
economic conditions. For example, we use our Cash Flow Software
to prepare the long term projections of the financial performance
of
the Resolution that serve as the basis for the rating of the issuer’s
bonds (based on rating agency “worst case” assumptions),
and that provide the quantitative assessment used to choose between
alternative structures for new bond issues (based on “reasonable” assumptions
for business decision making).
- Answer the “what should?” questions – organize
the results of alternative simulations to provide a quantitative
basis to decide upon an optimal course of action. For example,
we use specialized software to calculate exactly what share of a short
term convertible option bond should be remarketed long term to
minimize the issuer’s tax (rebate and mortgage yield) obligations,
and another to allocate and reallocate co-mingled investments for
rebate
purposes to individual issues so as to minimize the aggregate amount
of rebate payments to be made.
Of course, these tools would be of no value without the dedicated
team of skilled professionals to put them to effective problem
solving use. Our quantitative consultants have backgrounds in investment
banking, housing policy consulting, state housing finance agency
management, government and public accounting, and corporate law.
What makes the group unique, though, is a shared philosophy of
what
it takes to do the work right. To learn more about cfX Quantitative
Services, contact us.
info@cfx.com