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Balancing gains and risks. When clients consider sophisticated investment products (such as escrow restructurings, swaps and other hedges and gross funded float agreements), worries arise as to whether the financial and other risks associated with these products outweigh the gains. In the case of swaps or hedges, there is usually an informed balancing. In the case of investment products and escrow restructurings, the gains typically outweigh the potential risks, which are minimal.
Uncovering hidden savings in previous financings. The tax attorneys at Peck Shaffer use their considerable experience to help identify any possible strategy for recovering hidden savings for previously issued bonds. We have reviewed and supervised hundreds of transactions and are familiar with current strategies to reduce negative arbitrage and to ensure swap integration in computing bond yield. Over the past three years, tax attorneys at Peck Shaffer have uncovered escrow restructuring opportunities and project fund investment strategies where the window of opportunity was closing quickly. These strategies generated approximately $25 million in aggregate savings that could have been lost if the strategies were not employed in a timely fashion. Such complex strategies require proactive thinking and the Peck Shaffer tax attorneys pride themselves on being proactive as opposed to simply reacting.
Devising an optimal financing structure at the outset. Federal tax matters are a critical component of every tax-exempt financing and a great deal of time is consumed in the tax related analysis of every financing. The tax department provides a wide array of services to issuers, banks, underwriters and borrowers, including verification of cash flows, determination of arbitrage yield, calculation of arbitrage rebate amounts and development of optimal structures for every type of financing, including advance refundings, cash flow borrowings and all types of new money borrowings. We have built a strong reputation for determination and thoroughness in achieving savings for issuers through innovative financing structures and the development of permissible investment strategies.
Interest rate swaps and similar hedging instruments. Our firm is on the cutting edge when it comes to the use of hedging instruments (including interest rate swaps, swaptions, interest rate caps and basis swaps) and their impact on the yield of both bonds and investments. We are familiar with all aspects of the hedge integration rules and have served as bond counsel and special tax counsel on numerous advance refundings and new money issues involving variable rate bonds that were economically converted to fixed rate obligations through interest rate swaps. We have also developed a tax analysis to achieve yield restriction compliance for borrowers who want to generate greater interest rate savings by using LIBOR swaps.
Representative transactions. We have been involved with over 20 transactions during the past three years in which issuers and conduit borrowers have recouped millions of dollars in savings associated with unavoidable existing negative arbitrage in escrow funds. In addition, our tax attorneys suggested several project fund investments strategies that enabled one issuer to recoup approximately $4 million and another issuer to recoup over $3 million.