California Treasurer Kathleen Brown has selected Morgan Guaranty Trust Co. to provide a standby purchase agreement for the variable-rate portion of the state's estimated $5 billion note sale, scheduled for July.
After a competitive process, the state last week tapped Morgan Guaranty, a subsidiary of J.P. Morgan & Co., as lead agent for a portion of the revenue anticipation note sale.
Morgan, the only American bank still rated triple-A, is expected to assemble a syndicate of banks to provide a liquidity facility for the variable-rate portion.
Hal Geiogue assistant state treasurer, said seven banks responded to the state's request for qualifications. The other six banks, all foreign institutions, were Swiss Bank Corp., National Westminster Bank P.L.C., Credit Suisse, Barclays Bank, Union Bank of Switzerland, and Industrial Bank of Japan.
The request for qualifications asked banks how much money each could "personally put on the line," Mr. Geiogue said.
The state originally sought co-lead banks for the transaction. But several banks, including Morgan, urged the state to pick one lead bank, Mr. Geiogue said. Time pressures were the chief reason they gave, he said.
Mr. Geiogue said Morgan's ability to act in a timely fashion was important. The bank has a San Francisco office, and Mr. Geiogue, who is based in Sacramento, said the firm's proximity makes their bankers "quick to deal with."
"With the foreign banks, it takes days and days to get things cleared with the home office," Mr. Geiogue said. "An American bank is often more responsive."
Mr. Geoigue said that last year, when the state worked with triple-A rated Union Bank of Switzerland on the same financing, "there was an element of delay."
William P. Hansen Jr., vice president of public finance with Morgan, said his bank was chosen because of "the strength of our name and the fact that we are an American bank and have an increasing presence in California."
"We felt that it was in the best interest of the state to pick one lead bank because they are under a lot of time pressure," said Mr. Hansen. He said Morgan was already negotiating with several banks to be syndicate members.
Several sources said responsiveness was not the only factor benefiting Morgan. The bank reportedly committed an estimated $500 million toward the financing, they said.