The New York State Dormitory Authority is planning a competitive bond sale next week and selecting as lead bidders only municipal bond firms owned by women and minorities.
The $75 million bond sale, scheduled for next Thursday, has caused some controversy in the municipal bond market, with many firms complaining that placing restrictions on firms not owned by women or minorities violates the basic tenets of the competitive bidding procedure.
The authority will sell the bond on behalf of the City University of New York, which has encouraged the Dormitory Authority to use more women-owned and minority-owned firms in the agency's bond financings, said Theodore A. Holmes, the authority's first deputy executive director and general counsel.
Holmes said he is unaware of complaints about the deal coming from established mainline firms. He said, however, that several minority-owned firms have called the agency, concerned that they may experience difficult finding majority firms willing to join syndicates to bid on the issue.
Under the terms of the sale, larger firms can play a role in the issue by serving in syndicates headed by minority-owned or women-owned firms. Because of their relatively low capital levels, minority-and women-owned firms are not big players in the competitive sales arena, where market swings can cause firms to sustain big losses.
As a result, minority- and women-owned firms usually serve on syndicates headed by majority firms.
Holmes said about 13 minority-owned or women-owned firms are interested in the transaction, including M.R. Beal & Co.; Grigsby Brandford & Co.; Pryor, McClendon Counts & Co.; W.R. Lazard, Laidlaw & Mead Inc.;Artemis Capital Corp.; Muriel Siebert & Co.; and First American Securities.
The proposed transaction would mark the second such issue completed by the authority. In the mid-1980s, the authority also sold bonds on a competitive basis with a bidders' list restricted to women and minority firms.