WEBVTT - Supply Chain, Markets, and Muni Bonds (Podcast) 0:00:00.800 --> 0:00:04.040 Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside 0:00:04.040 --> 0:00:06.920 my co host Matt Miller. Every business day, we bring 0:00:06.960 --> 0:00:11.520 you interviews from CEOs, market pros, and Bloomberg experts, along 0:00:11.520 --> 0:00:15.600 with essential market moving news on the Bloomberg Markets Podcast, 0:00:15.600 --> 0:00:18.439 on Apple Podcasts or wherever you listen to podcasts, and 0:00:18.480 --> 0:00:22.320 at Bloomberg dot com slash podcast supply chain. It's been 0:00:22.320 --> 0:00:24.200 one of our favorite topics to talk about during in 0:00:24.239 --> 0:00:28.040 the last several years. Boy, it got ugly there towards 0:00:28.040 --> 0:00:31.200 the beginning of the pandemic um, but now it seems 0:00:31.200 --> 0:00:34.120 to be getting better. And we talked to Jeans Siroca. 0:00:34.360 --> 0:00:35.839 He's the CEO of the Port of l A. He 0:00:35.880 --> 0:00:38.080 always gives us a good sense of what's going on 0:00:38.120 --> 0:00:40.519 there because the Port of l A is huge and 0:00:40.720 --> 0:00:43.440 particularly coming from that Asia trade. Gene, thanks so much 0:00:43.440 --> 0:00:45.800 for joining us here. Um, give us a sense of 0:00:45.840 --> 0:00:48.440 how that things are at your port, how many ships 0:00:48.440 --> 0:00:53.040 are waiting in harbor, how's the port itself, the railroads, 0:00:53.080 --> 0:00:55.320 the trucks, what's your dashboard looked like, how's it all 0:00:55.360 --> 0:00:59.840 playing out? Good morning, Paul, and that the backlog is 0:01:00.000 --> 0:01:04.120 it's in Los Angeles effectively left us back in August. 0:01:04.319 --> 0:01:07.440 We all left five of the first seven months of 0:01:07.480 --> 0:01:10.480 the year going box for box with that all top number. 0:01:10.480 --> 0:01:13.920 In two thousand one, we had the peak season come 0:01:14.000 --> 0:01:16.320 in early June and July. We're are best on record 0:01:16.360 --> 0:01:20.280 in a hundred and fifteen years. Then the next porter 0:01:20.360 --> 0:01:23.040 has got a little bit nervous ongoing dock workers in 0:01:23.080 --> 0:01:26.160 negotiations and shift the cargo to the east into Gulf Coast. 0:01:26.280 --> 0:01:31.039 We've got about late capacity today. So so what does 0:01:32.120 --> 0:01:34.960 shipping look like right now? I mean, we're getting into 0:01:35.000 --> 0:01:38.560 the holiday season, right the pandemics over for the western world. 0:01:38.920 --> 0:01:42.959 Are we seeing um, you know, peak traffic right now? 0:01:44.000 --> 0:01:48.400 Are you expecting to get busy this month? No, I 0:01:48.400 --> 0:01:52.640 don't think. Again, a little bit earlier that that traditional 0:01:52.680 --> 0:01:55.840 import and export manager didn't want to get into the 0:01:55.920 --> 0:01:59.800 teeth of supply chain and port congestion all over again 0:01:59.840 --> 0:02:01.360 for the third year in a row. They were a 0:02:01.400 --> 0:02:05.280 little conservative, hedged Brock cargo in early to pad those 0:02:05.320 --> 0:02:08.320 transit times, to make sure indoor states were realized and 0:02:08.800 --> 0:02:11.320 make sure they stayed away from any potential labor disruption 0:02:11.360 --> 0:02:14.840 which was not going to happen. Both the employers Association 0:02:15.040 --> 0:02:17.840 and the dock Workers Union put out two joint media 0:02:17.919 --> 0:02:21.799 releases simply stated they won't strike and they won't walk 0:02:21.840 --> 0:02:25.120 out labor. Yet that's been tough to convince the American 0:02:25.160 --> 0:02:28.639 cargo owner. Hey, Jean, we're hearing reports really over the 0:02:28.720 --> 0:02:32.560 last several days that finally Japan. I mean, I'm sorry, 0:02:32.639 --> 0:02:35.480 China maybe reopening here. I've maybe in response to some 0:02:35.520 --> 0:02:38.360 of the protests, but if China is really going to reopen, 0:02:38.400 --> 0:02:41.280 how do you guys kind of you know, get ready 0:02:41.360 --> 0:02:42.720 for that, because that my sense will be there a 0:02:42.720 --> 0:02:46.600 lot more sailings and coming out of China. Maybe possibly, 0:02:46.639 --> 0:02:50.440 But we never saw the precipitous drop that some observers 0:02:50.480 --> 0:02:53.480 called for, even with the third and fifth waves of 0:02:53.520 --> 0:02:57.520 COVID variants or the shutdowns that really clamped down on 0:02:57.639 --> 0:03:01.440 my old hometown of Shanghai. Full were months on end 0:03:01.760 --> 0:03:05.560 the central government and ports, specifically the Young Shan Deep 0:03:05.560 --> 0:03:09.519 Seaport in Shanghai, prioritize their long haul cargo. That meant 0:03:09.600 --> 0:03:12.839 that our goods were gonna come in unabated. We saw 0:03:12.840 --> 0:03:14.520 a little bit of a dip, a little pick up, 0:03:14.639 --> 0:03:18.200 and obviously there were examples of what the lockdown meant 0:03:18.280 --> 0:03:22.640 a subassembly, manufacturing and transportation, but no real impact. I 0:03:22.639 --> 0:03:25.720 don't expect a crush of cargo coming our way either 0:03:26.080 --> 0:03:30.480 because of this reopening. No. Yeah. In fact, Bloomberg Business 0:03:30.560 --> 0:03:33.760 we put out a story and they have indicators for 0:03:35.040 --> 0:03:37.840 each port at the port of l a Um, Singapore, 0:03:37.960 --> 0:03:44.160 Hong Kong. All blow normal right now, which is strange, 0:03:44.440 --> 0:03:48.080 I guess with unless you consider the fact that everybody 0:03:48.160 --> 0:03:51.240 is looking towards a recession and there's a war um 0:03:51.720 --> 0:03:56.320 waging in Eastern Europe. Do you expect a pick up 0:03:56.480 --> 0:03:59.720 in three um? Do you think we need the war 0:03:59.800 --> 0:04:03.720 to and what's the story there? Well, there's a lot 0:04:03.880 --> 0:04:07.040 that's got to be fixed overall. Again in the supply chain, 0:04:07.080 --> 0:04:10.920 every day something happens that gives us pause or creates 0:04:11.320 --> 0:04:13.800 an ability for us to pivot and move forward. I 0:04:13.880 --> 0:04:16.240 read the article this morning coming off of the supply 0:04:16.360 --> 0:04:20.200 lines email that I get every day. Realistically speaking, what 0:04:20.279 --> 0:04:23.000 we see right now is that you had in the US, 0:04:23.080 --> 0:04:26.040 you had a lot of inventory and it was mismatched 0:04:26.080 --> 0:04:30.080 with us as consumers. Folks started buying just in case, 0:04:30.160 --> 0:04:34.080 no longer just in time. The warehouses in southern California, 0:04:34.400 --> 0:04:37.000 of which we boast two billion square feet are still 0:04:37.040 --> 0:04:40.560 filled to the gills. So this time of holiday season, 0:04:40.960 --> 0:04:44.120 trying to push out all of that excess inventory, in 0:04:44.240 --> 0:04:47.520 many cases at discounted levels and have a reset at 0:04:47.520 --> 0:04:50.440 the beginning of the year for a more normal omni 0:04:50.560 --> 0:04:54.200 channel distribution and proturement network. Seems to be what we're 0:04:54.200 --> 0:04:57.359 looking at right now. But again, folks are wringing their hands. 0:04:57.480 --> 0:05:00.480 Is it recession? Interest rates going up? With said due 0:05:00.560 --> 0:05:03.640 next There's a lot on our plate in that economic equation. 0:05:03.960 --> 0:05:07.120 All right, Jean, good stuff. As always, we always appreciate 0:05:07.120 --> 0:05:10.120 getting your thoughts here. Jean Stroka. He is the CEO 0:05:10.360 --> 0:05:12.479 of the Port of Los Angeles, giving a sense of 0:05:12.600 --> 0:05:16.159 kind of how things are going on supply chain route 0:05:16.160 --> 0:05:18.280 as we We've been talking to Jean all throughout this pandemic. 0:05:21.360 --> 0:05:25.720 We're all in on reading the billboard for Bild American 0:05:25.880 --> 0:05:28.320 Mutual and we're down there at their headquarters with with 0:05:28.360 --> 0:05:32.520 the CEO, John McCarthy here the CEO and Sean. Before 0:05:32.520 --> 0:05:33.480 we get into it, I just want to tell you 0:05:33.480 --> 0:05:36.000 a little story about Paul, my co host here. So 0:05:36.240 --> 0:05:40.279 he started in UH financial Services on Wall Street like 0:05:40.320 --> 0:05:44.240 the day after Black Friday in right great timing. And 0:05:45.160 --> 0:05:48.320 he's of the generation that wanted, you know, big paychecks 0:05:48.360 --> 0:05:52.719 and worked, uh you know, wake until sleep to get them. Um, 0:05:52.800 --> 0:05:55.479 no other life besides Wall Street and earning money. I 0:05:55.480 --> 0:05:57.640 asked somebody did with this first bonus because I figured 0:05:57.640 --> 0:05:59.720 most people like take their first bonus and go buy 0:05:59.720 --> 0:06:04.280 a roll lex or something. He bought Muni's very smart, exactly. 0:06:04.320 --> 0:06:06.400 Clipping coupons is what he does on the weekends. He 0:06:06.480 --> 0:06:09.400 just sits by the pool and clips his coupons eggs 0:06:09.400 --> 0:06:12.679 and it's been it's been a good ride. Build American Mutual, Sean, 0:06:13.120 --> 0:06:14.840 thanks so much for having us down here and your 0:06:14.880 --> 0:06:17.400 lovely offices down here in tour the Liberty Street. What 0:06:17.440 --> 0:06:19.800 do you guys do it? Build American Mutual? So we 0:06:19.880 --> 0:06:23.400 are municipal bond ensure. We're double A rated by standing 0:06:23.440 --> 0:06:27.000 in ports, and we guarantee, so you ensure municipal bond issuers. 0:06:27.040 --> 0:06:28.760 We don't you think of it this way. It's a 0:06:28.800 --> 0:06:31.120 little like if you have a child who's gone to 0:06:31.160 --> 0:06:33.760 college takes out a student loan. You want him to 0:06:33.800 --> 0:06:35.200 get a job, you want him to pay it back, 0:06:35.240 --> 0:06:37.279 but if he doesn't, you're on the hook because you've 0:06:37.279 --> 0:06:40.840 co signed the loan. Think, Okay, what what we're doing 0:06:40.880 --> 0:06:42.920 is we're guaranteeing to make sure that timely payment of 0:06:42.960 --> 0:06:45.880 principle and interest when due. For the investors, well, I 0:06:45.920 --> 0:06:47.359 know where my guys sleep at night, so if they 0:06:47.400 --> 0:06:49.720 don't pay anywhere to find him talk to us about 0:06:49.720 --> 0:06:52.839 the municipal bond market. Um, just today, it's been such 0:06:52.839 --> 0:06:56.320 a rough year for fixed income, double digit declines across 0:06:56.320 --> 0:06:58.920 the entire fixed income space. Talks about the musical bond market. 0:06:59.000 --> 0:07:02.400 So I think right now it's a tale of two markets. Uh. 0:07:02.440 --> 0:07:06.240 This year, there was a hundred um uh billion dollars 0:07:06.240 --> 0:07:08.360 of outflows from the municipal market in the first part 0:07:08.400 --> 0:07:11.960 of the year, and that's really a transition from very 0:07:12.000 --> 0:07:14.200 low interest rates of last year in the beginning of 0:07:14.200 --> 0:07:16.800 this year to hire interest rates now. And so what 0:07:16.880 --> 0:07:20.040 we're seeing at this moment as a re entry of 0:07:20.280 --> 0:07:23.360 municipal investors back into the market. And I have to think, 0:07:23.360 --> 0:07:26.880 what does the municipal market do. It finances eighty percent 0:07:27.120 --> 0:07:30.760 of essential infrastructure. So when you think about infrastructure, it's 0:07:30.920 --> 0:07:33.440 state and local governments that are financing that. There are 0:07:33.640 --> 0:07:37.320 right now four trillion dollars of municipal bonds that are outstanding, 0:07:37.760 --> 0:07:39.760 and and and of that, if you just try to 0:07:39.800 --> 0:07:43.320 put a sense for whom who buy? Who are the 0:07:43.360 --> 0:07:47.280 issuers there? They are state and local governments. They're fifty 0:07:47.320 --> 0:07:51.200 thousand individual issuers state and local governments, which means that 0:07:51.240 --> 0:07:54.720 there are you know, about five times the total number 0:07:54.720 --> 0:07:56.680 of different issuers than there are in the New York 0:07:56.720 --> 0:07:59.080 Stock Exchange in the NASTAC put together. So it's a 0:07:59.200 --> 0:08:02.600 huge mark it but it's also one that is traditionally 0:08:02.760 --> 0:08:07.360 very staid. Right. Um, towns and cities are gonna always 0:08:07.400 --> 0:08:11.440 have financing needs, They constantly need to issue debt um 0:08:11.520 --> 0:08:14.360 and they rarely default. And then when you step in 0:08:14.480 --> 0:08:17.560 and ensure their bonds, investors can be sure they're not 0:08:17.720 --> 0:08:20.560 going to default or if they do, you know you'll 0:08:20.560 --> 0:08:23.480 catch them fall. So um, that's a hunder percent, right, 0:08:23.520 --> 0:08:26.600 I mean, really, what we're focused on is, uh two things. 0:08:26.960 --> 0:08:35.160 Essential public purpose is state and local governments issuing for hospitals, bridges, tunnels, roads, um, 0:08:35.280 --> 0:08:39.840 and and that they don't default often. But what we're 0:08:39.880 --> 0:08:44.120 doing is three things, credit default protection, greater liquidity for 0:08:44.120 --> 0:08:47.960 those municipal bonds, and greater price protection. So those bonds 0:08:48.000 --> 0:08:50.560 traded a more stable level. But what I'm getting at 0:08:50.600 --> 0:08:53.160 those there's typically not so much volatility. This has been 0:08:53.200 --> 0:08:55.920 a very odd year for muni's, right, has been for 0:08:55.920 --> 0:08:58.560 the whole market, But traditionally muni's trade a little bit 0:08:58.600 --> 0:09:03.640 differently than definitely corporate debt and even treasuries. That's correct, UH, 0:09:03.679 --> 0:09:05.680 and that's really because if you think about who are 0:09:05.720 --> 0:09:09.280 the buyers of municipal bonds, it's households. It's mutual funds 0:09:09.360 --> 0:09:13.600 that represent households. So it's people who are buying UH 0:09:13.760 --> 0:09:18.880 bonds that have a long UH maturity, and so they're 0:09:18.920 --> 0:09:22.200 doing that for their portfolios for greater stability and and 0:09:22.280 --> 0:09:25.880 less volatility than other potential investments like equities. So during 0:09:25.880 --> 0:09:29.079 this pandemic, we've seen coming out of Watchington a big 0:09:29.120 --> 0:09:31.560 infrastructure bill, and I'm guessing a lot of that's got 0:09:31.600 --> 0:09:33.520 to be financed in the municipal bond market. Have you 0:09:33.559 --> 0:09:36.920 started to see activity tied with that at all or 0:09:36.920 --> 0:09:39.079 is that something still to come. So I think the 0:09:39.280 --> 0:09:43.760 past at one point one trillion dollar package, but the 0:09:43.760 --> 0:09:46.240 bipartisan bill, and I think what's going to happen in 0:09:46.280 --> 0:09:49.640 the municipal bond market is a lot of those programs 0:09:49.720 --> 0:09:52.040 are match funded. So if you think about if you're 0:09:52.040 --> 0:09:55.600 gonna borrow to repair your roads and it's repaired just 0:09:55.640 --> 0:09:57.400 as much as build new things. If you think about 0:09:57.400 --> 0:10:01.920 really what's going on UM from New York City, well, 0:10:02.000 --> 0:10:05.800 they's an opportunity. Yeah, So if you think about how 0:10:05.880 --> 0:10:11.480 much UH gets to be invested UM, the federal program 0:10:11.520 --> 0:10:13.959 is a matched fund program, so that if you want 0:10:13.960 --> 0:10:16.320 to borrow fifty million dollars from that program, you're gonna 0:10:16.360 --> 0:10:19.040 issue fifty million dollars worth of municipal bonds in order 0:10:19.080 --> 0:10:22.800 to make that project a reality. And so right now 0:10:23.080 --> 0:10:26.200 that money has been approved, it's now just starting to 0:10:26.320 --> 0:10:29.280 roll out into the market. And so my our estimation 0:10:29.280 --> 0:10:32.720 would be that that that activity will really take hold 0:10:33.040 --> 0:10:34.959 in the next couple of years. But this means so 0:10:35.160 --> 0:10:38.000 I have always thought or or this year, you know 0:10:38.040 --> 0:10:40.720 now that these municipalities are so cash rich, maybe they 0:10:40.720 --> 0:10:42.880 don't need to issue as many bonds. But you're saying 0:10:42.920 --> 0:10:47.040 that a lot of that money came with issuance UH concurrent. 0:10:47.400 --> 0:10:49.720 So think about it this way. What's happened this year, 0:10:49.760 --> 0:10:53.920 particularly for for volume is UH. It's about three hundred 0:10:53.960 --> 0:10:59.200 and sixty billion dollars volume of issuance this year, Um, 0:10:59.240 --> 0:11:04.400 they're virtual. No refinancings, so normally about the market or refinancings. 0:11:04.440 --> 0:11:07.480 As interest rates have gone up, refinancings have gone down. 0:11:08.040 --> 0:11:11.240 But the important thing to remember is that essential projects 0:11:11.240 --> 0:11:15.199 still have to be built, Existing facilities have to be repaired, 0:11:15.520 --> 0:11:19.080 and so the market has a steady issuance going forward, 0:11:19.120 --> 0:11:20.720 and we project that that's going to be the same 0:11:20.960 --> 0:11:23.640 for the next you know, five ten years. As a 0:11:23.679 --> 0:11:27.040 former banker, I've always told companies, you know, borrow when 0:11:27.080 --> 0:11:29.079 you can, raise capital when you can, and not when 0:11:29.120 --> 0:11:31.240 you need it. But it's not necessarily the case in 0:11:31.360 --> 0:11:34.480 municipal bond space. There they don't market time. It's is 0:11:34.480 --> 0:11:37.440 my understanding. They raise money when they need it, correct, 0:11:37.480 --> 0:11:39.520 you know, So as you look at can you do 0:11:39.559 --> 0:11:41.559 you have the municipality saying I'm going to issue in 0:11:42.640 --> 0:11:45.600 three for a bridge that we're building. Did they did 0:11:45.600 --> 0:11:47.920 they give you that kind of visibility or is it 0:11:48.080 --> 0:11:50.800 there's a long term process in order to come to 0:11:50.840 --> 0:11:53.720 the market for for new for large new projects. So 0:11:53.760 --> 0:11:56.360 if you think about any town, a town in Connecticut, 0:11:56.400 --> 0:11:58.959 a town in Nevada, when they decided they're going to 0:11:59.000 --> 0:12:00.760 build a new town hall or they're gonna put in 0:12:00.800 --> 0:12:03.800 new sidewalks. They go through a planning process, they go 0:12:03.840 --> 0:12:07.080 through the approval process. Remember these things are paid from 0:12:08.200 --> 0:12:10.960 taxes at a local level, so they go through an 0:12:11.000 --> 0:12:13.640 approval process, they design what they're going to build, and 0:12:13.720 --> 0:12:17.240 then they issue the bonds. In most circumstances, municipalities have 0:12:17.280 --> 0:12:20.720 a financial advisor that represents them and putting the transaction together, 0:12:21.040 --> 0:12:23.880 and then they hire an underwriter UM, you know, like 0:12:23.960 --> 0:12:27.840 City Bank or or Bank of America to uh, you know, 0:12:28.040 --> 0:12:30.760 bring those bonds to market and sell them to investors. 0:12:30.760 --> 0:12:33.560 So if you're ensuring an issue, do you guys have 0:12:33.600 --> 0:12:37.640 to perform credit analysis yourself to decide how much your 0:12:37.720 --> 0:12:42.120 charge for that? Absolutely. The vast majority of the people 0:12:42.160 --> 0:12:45.120 you see here are our credit analysts, and so we 0:12:45.160 --> 0:12:48.840 spend all of our time, our credit committee needs every year, 0:12:49.440 --> 0:12:56.320 every day think about what's happening. So what we're doing 0:12:56.440 --> 0:12:58.920 is UM making a credit decision to guarantee the bond. 0:12:58.920 --> 0:13:01.120 And I think about it this way. Our kind of 0:13:01.160 --> 0:13:04.760 insurance is unique because we don't you know, there is 0:13:04.800 --> 0:13:07.960 no waiver. We pay first and then mitigate later so 0:13:08.000 --> 0:13:10.520 that the investor knows they're going to get their payment 0:13:10.960 --> 0:13:13.439 when when they expected to get it, and that's fundamentally 0:13:13.440 --> 0:13:16.520 important to what we do. So our process of not 0:13:16.600 --> 0:13:19.400 only underwriting the transactions when they come to market, but 0:13:19.600 --> 0:13:23.600 surveiling them UH is an important part. So we we 0:13:23.679 --> 0:13:28.720 watch those municipal bond issues um until they mature. And 0:13:28.760 --> 0:13:31.280 that's something that the investors can take comfort in and frankly, 0:13:31.559 --> 0:13:33.959 the issuers take comfort in. Historically, have you guys done 0:13:34.000 --> 0:13:37.520 in terms of losses or just risk from these questions? 0:13:37.559 --> 0:13:40.160 So we've been in business eleven years. I've been in 0:13:40.160 --> 0:13:42.200 in the bonding trans business for a very very long time. 0:13:42.760 --> 0:13:46.760 We have issued a hundred and fifteen billion dollars worth 0:13:46.760 --> 0:13:50.560 the transactions. We've had no default. I'll take that. So 0:13:50.600 --> 0:13:53.160 that's some good credit analysts around here. I'm surrounded by 0:13:53.200 --> 0:13:56.640 these sharp credit analyst guys. Good stuff, all right, Sean, 0:13:56.679 --> 0:13:59.480 thanks so much for having us here. Sean McCarthy, he's 0:13:59.640 --> 0:14:02.480 build American Mutual, he's a chief executive officer. We never 0:14:02.520 --> 0:14:04.160 got to ask about work from home. We gotta talk 0:14:04.160 --> 0:14:06.079 to him during the break because I gotta know if 0:14:06.120 --> 0:14:08.360 all these guys came in today just because we're here 0:14:08.440 --> 0:14:10.880 just to see us to three days a week everybody's 0:14:10.880 --> 0:14:13.400 in the office. That's kind of where we're rotated around. 0:14:13.880 --> 0:14:15.760 And that's the thing. And the one final thing I 0:14:15.840 --> 0:14:18.640 just mentioned is that we're a mutual. So the people 0:14:18.679 --> 0:14:21.080 who are are stakeholders and own the company are the 0:14:21.120 --> 0:14:24.480 five thousand municipalities that have taken our insurance. Okay, that's important, 0:14:24.480 --> 0:14:27.160 that's important. All right, good stuff, all right, Sean McCarthy, 0:14:27.200 --> 0:14:31.360 great stuff. Built American Mutual Chief a bacont of officer. Bam, 0:14:31.560 --> 0:14:36.880 there you go, thanks for being here. Let's talk about 0:14:37.280 --> 0:14:41.360 municipal finance financing big cities, and boy, there's not too 0:14:41.360 --> 0:14:44.200 many bigger than the City of Chicago. Jenny Kwang Bennett 0:14:44.480 --> 0:14:47.080 joins us. She's a chief finance officer for the City 0:14:47.120 --> 0:14:49.640 of Chicago. Jenny, thanks so much for joining us here 0:14:49.720 --> 0:14:52.320 at the Build American Mutual Offices. Talk to us about 0:14:52.360 --> 0:14:56.480 the financial situation, the financial health, the financial um, you know, 0:14:56.600 --> 0:14:58.840 outlook for the city of Chicago. Great city, one of 0:14:58.840 --> 0:15:01.840 the America's great cities. Talked to us about Chicago. Sure, absolutely, 0:15:01.840 --> 0:15:03.840 and thank you for having me. Always happy to talk 0:15:03.880 --> 0:15:06.840 about the city of Chicago and its financial turnaround. Um, 0:15:06.880 --> 0:15:08.560 you don't have to take my word for it. Although 0:15:08.560 --> 0:15:11.000 I will speak to some of the financial improvements at 0:15:11.040 --> 0:15:13.680 the city, but very importantly, the City of Chicago has 0:15:13.760 --> 0:15:17.280 achieved ten rating upgrades across various credits at the City 0:15:17.320 --> 0:15:22.000 of Chicago plus two outlook upgrades UM too Positive over 0:15:22.040 --> 0:15:25.240 the last four months, and it's a demonstration of the 0:15:25.240 --> 0:15:28.000 financial turnaround that the city is in right now. The 0:15:28.120 --> 0:15:33.320 upgrades have spanned the city's GEO STSC credit UM, the 0:15:33.480 --> 0:15:37.840 Airport credit, the water and Sewer credits UH, the o'hared 0:15:37.840 --> 0:15:40.280 midway credits, and all of that for the first time 0:15:40.360 --> 0:15:43.520 in six to twelve UM. It's a lot of financial 0:15:43.600 --> 0:15:46.640 improvement at the city. In particular, the corporate fund credit 0:15:47.040 --> 0:15:50.400 UM has seen structural balance now UM for the first 0:15:50.400 --> 0:15:54.720 time in decades. We have climbed a pension ramp that 0:15:54.840 --> 0:15:58.240 has included one point eight billion dollars and increased UH 0:15:58.280 --> 0:16:02.040 pension funding over the last three years. And very importantly, 0:16:02.520 --> 0:16:04.600 we have found a way to do all of that 0:16:04.680 --> 0:16:07.240 in the midst of a pandemic. And so it's a 0:16:07.320 --> 0:16:10.480 very important turnaround for the city in terms of all 0:16:10.520 --> 0:16:13.120 of the financial metrics that rating analysts follow on a 0:16:13.120 --> 0:16:16.480 regular basis. UM. Very importantly, we've also climbed our debt ramp, 0:16:16.560 --> 0:16:19.240 which allows us to advertize somewhere between three hundreds of 0:16:19.280 --> 0:16:22.360 four hundred million dollars in principle a year. UM. That's 0:16:22.360 --> 0:16:25.200 reduced our overall debt burden by three quarters of a 0:16:25.240 --> 0:16:28.200 billion dollars UM over the last three years. And by 0:16:28.200 --> 0:16:30.480 way of perspective, the City of Chicago has twenty six 0:16:30.520 --> 0:16:33.400 billion dollars of debt outstanding. UM. In general, we are 0:16:33.480 --> 0:16:35.360 one of the top ten issues and municipal debt in 0:16:35.360 --> 0:16:37.760 the market. And so UM, it's a there's a There 0:16:37.760 --> 0:16:40.480 are a lot of financial metric improvements that have occurred 0:16:40.640 --> 0:16:44.200 over the last three years, in particular during Mayor Lightfoots administration, UM, 0:16:44.200 --> 0:16:46.400 but also over the course of decades for the City 0:16:46.440 --> 0:16:48.880 of Chicago that has led to this moment where UM, 0:16:48.920 --> 0:16:52.120 we're getting recognition across the board by the rating agencies. 0:16:52.160 --> 0:16:55.840 So no more junk UH debt for the City of Chicago, 0:16:56.120 --> 0:16:59.560 and you've found ways to make an impact socially right 0:16:59.600 --> 0:17:02.880 in term of your debt issuance. Yes, absolutely, um, So 0:17:02.920 --> 0:17:05.800 to your point, Moody's has upgraded us to investment grade, 0:17:05.840 --> 0:17:08.000 and so now the City of Chicago is investment grade 0:17:08.000 --> 0:17:10.800 across all of its credits UM. In addition to that, 0:17:10.880 --> 0:17:12.840 because of the fact that we climbed our debt ramp 0:17:12.840 --> 0:17:15.240 and because of the fact that we've climbed our pension ramp, 0:17:15.560 --> 0:17:18.879 cleared our deferred liabilities, were now able to make historic 0:17:18.960 --> 0:17:21.680 investments in the City of Chicago. UM. There are three 0:17:21.720 --> 0:17:24.440 main investment plans. There's the Chicago Recovery Plan, which is 0:17:24.480 --> 0:17:27.400 one point two billion dollars making some of the most 0:17:27.440 --> 0:17:30.520 historic progressive investments in the city, including the Vacant Law 0:17:30.600 --> 0:17:35.200 Investment Program UM, Affordable Housing, Fleet Decarbonization UM, so on, 0:17:35.240 --> 0:17:38.240 and so forth. There's the Invest Southwest Program, which makes 0:17:38.280 --> 0:17:41.119 two billion dollars of economic development investments in South and 0:17:41.119 --> 0:17:44.199 West Side neighborhoods, largely low income neighborhoods in Chicago. And 0:17:44.200 --> 0:17:46.960 then there's a Chicago Works Program, which is our deferred 0:17:47.320 --> 0:17:52.760 capital maintenance program, streets lighting, UM, typical infrastructure investment. All 0:17:52.760 --> 0:17:55.840 told that six billion dollars of investments that we're making 0:17:56.080 --> 0:17:59.359 and UH. Within that, we've selected a number of projects 0:17:59.400 --> 0:18:02.320 that will make up our inaugural Social Impact Bond issuance, 0:18:02.359 --> 0:18:05.080 which will be coming UM in the next month or so. 0:18:05.080 --> 0:18:07.600 So in the last several years, we've seen some big 0:18:07.640 --> 0:18:13.840 corporate UM residents of Chicago leaves Citadel Boeing talk to 0:18:13.880 --> 0:18:16.280 us about the challenges you as a city have in 0:18:16.359 --> 0:18:20.760 kind of trying to attract and retain UH corporate residents. 0:18:20.840 --> 0:18:24.480 You know, big, big, big companies. Sure, so I would 0:18:24.520 --> 0:18:27.440 offer that UM, although you know we UM, you know 0:18:27.480 --> 0:18:29.320 are stating by the loss of those firms that you 0:18:29.359 --> 0:18:32.719 mentioned in particular UM, the number of jobs impacted our 0:18:32.920 --> 0:18:35.240 very smallest compared to the total number of jobs that 0:18:35.320 --> 0:18:37.879 we've increased over the course of the last few years, 0:18:37.880 --> 0:18:40.040 in particular in the midst of the pandemic. So the 0:18:40.040 --> 0:18:42.000 city of Chicago has seen a hundred and seventy one 0:18:42.000 --> 0:18:45.919 pro Chicago decisions, which we define as headquarters UM or 0:18:45.920 --> 0:18:48.960 corporate relocations that increase their presence in the city of Chicago, 0:18:49.359 --> 0:18:52.920 and that's created around twenty thousand new jobs and which 0:18:52.960 --> 0:18:56.679 then themselves creates another thirty thousand jobs. Some notable recent 0:18:57.240 --> 0:19:00.639 editions includes Google, who has UM add at a new 0:19:00.800 --> 0:19:03.400 UM facility to their existing facility in the west Loop 0:19:03.680 --> 0:19:06.440 that will generate thousands of new jobs for the city. 0:19:06.920 --> 0:19:09.639 Uh kellon UM has announced that they're moving their largest 0:19:09.640 --> 0:19:11.760 division to the city of Chicago, which is their snack 0:19:11.800 --> 0:19:14.800 division around the about eleven billion dollars of revenue and 0:19:14.800 --> 0:19:17.240 then um in addition to that, we also had Kimberly 0:19:17.280 --> 0:19:20.800 Clark make a major corporate relocation as well as UMU 0:19:21.160 --> 0:19:23.840 as as well as Discover, who put their largest call 0:19:23.920 --> 0:19:25.920 center in one of our South Side neighborhoods. Which it 0:19:26.000 --> 0:19:29.399 like working with Illinois because I'm assuming, uh, some of 0:19:29.400 --> 0:19:32.639 the Leavers had concerns about the state more than the 0:19:32.680 --> 0:19:35.800 city of Chicago. Um So, the city of Chicago is 0:19:36.080 --> 0:19:39.040 the largest economic engine within the state of Illinois, and 0:19:39.119 --> 0:19:41.639 we provide a lot of a lot of revenue to 0:19:41.680 --> 0:19:44.360 the state. UM. We did just pass the casino as well, 0:19:44.400 --> 0:19:47.440 which will generate significant value to the state and to 0:19:47.520 --> 0:19:50.320 the city somewhere around five billion dollars in total. Um So, 0:19:50.400 --> 0:19:52.240 there are a lot of ways that we contribute to 0:19:52.280 --> 0:19:54.760 the state. UM. You know, we also spent a lot 0:19:54.800 --> 0:19:57.120 of way. There's going to be a casino in Chicago. Yes, 0:19:57.160 --> 0:19:59.400 there's a new casino in Chicago. It's been authorized. It's 0:19:59.440 --> 0:20:01.480 roundly about a hundred million dollars a year in revenue 0:20:01.520 --> 0:20:05.159 to the city. Um uh. And then another um you know, uh, 0:20:05.280 --> 0:20:07.040 two hundred million or so in revenue to the state 0:20:07.040 --> 0:20:10.359 of Illinois. Talk to us about the crime situation in 0:20:10.480 --> 0:20:13.960 Chicago and how what kind of headwinds that presents to 0:20:14.720 --> 0:20:17.399 the city and kind of what's the administration's planned to 0:20:18.080 --> 0:20:20.679 try to address that. We have, you know, similarsus here 0:20:20.680 --> 0:20:22.359 in New York City, but Chicago seems to get a 0:20:22.359 --> 0:20:25.240 lot of attention. UM So what we're experiencing in terms 0:20:25.320 --> 0:20:28.520 of public safety trends is not dissimilar from what a 0:20:28.520 --> 0:20:31.200 lot of other urban areas face. Um you know. We 0:20:31.440 --> 0:20:33.280 know in the city of Chicago that there has been 0:20:33.359 --> 0:20:38.199 historic segregation, UM and disinvestment in largely low income neighborhoods. 0:20:38.280 --> 0:20:42.040 And so that's why one of the um UH investments 0:20:42.080 --> 0:20:45.120 that we started out with, even before the investment investment 0:20:45.119 --> 0:20:47.920 plans I just mentioned, um you know, was about making 0:20:47.960 --> 0:20:51.160 deeper investments in South and West side neighborhoods in order 0:20:51.200 --> 0:20:54.439 to try to write some of those historic wrongs. What 0:20:54.560 --> 0:20:56.720 that means by way of public safety is that we're 0:20:56.760 --> 0:21:00.399 making the investments that create wrap around services that addresses 0:21:00.440 --> 0:21:03.119 the root causes of violence. So rather than taking a 0:21:03.160 --> 0:21:06.080 policing approach which we know will have immediate impact but 0:21:06.160 --> 0:21:09.920 ultimately won't create transformative change for those neighborhoods. We're taking 0:21:09.960 --> 0:21:13.520 that broader citywide, whole of government approach. What's that? What 0:21:13.640 --> 0:21:16.760 that's resulted in in the top fifting communities that have 0:21:16.920 --> 0:21:19.840 over of the crime in the city of Chicago, Dave 0:21:19.840 --> 0:21:23.240 Steen somewhere between a thirty and fifty percent reduction in crime, 0:21:23.320 --> 0:21:26.159 in particular by way of homicides and shootings, And so 0:21:26.200 --> 0:21:28.600