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(email exchange)

>  On 12/6/08, Jason wrote:
>  This will be a bellweather for the muni cash market. Harvard is one of the best credits in
>  muni space outside the AAA state GOs. They plan to bring 500mm deal. if market can
>  not absorb this, it does not bode well for muni cash.
>  It also potentially represents a very attractive buying opportunity for muni investors. This
>  very high quality deal may come at a big concession
>  Lastly, Harvard is doing this to refinance there VRDNs. The VRDNS were most likely
>  originally on with pay fixed swaps. Thus as they pay off the VRDNs they are potentially
>  net receivers of BMA swaps. hence the move lower in ratios. More of this to come in my
>  opinion.

Hedging cash munis with BMA swaps has to be another large hedge gone bad.

It’s another mixed metaphor strategy, sort of like corporate basis.

The unwind side could easily result in serious overshooting in the other direction.

Harvard University to Sell Bonds to Repay Debt, Cancel Swaps

By Bryan Keogh

Dec. 5 (Bloomberg) — Harvard University, the oldest U.S. college, plans to sell taxable and non-taxable bonds to repay debt and terminate interest-rate swap agreements.

The university will offer $600 million of top-rated, tax-exempt bonds next week, Bloomberg data show. Cambridge, Massachusetts-based Harvard also plans a separate sale of 5-, 10- and 30-year debt as soon as today, according to a person familiar with the transaction.

And the big winner is:

JPMorgan Chase & Co., Goldman Sachs Group Inc. and Morgan Stanley are managing the bond sale. New York-based JPMorgan is managing the municipal sale.


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