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INDIANA BOND BANK
RFI FOR QUALIFIED INDEPENDENT REPRESENTATIVE
DATE: March 13, 2017
TO: Qualified Independent Representative
RE: Indiana Bond Bank, Fuel Budgeting Program
Request for Information
The Indiana Bond Bank (the “IBB”) is providing a Request for Information (“RFI”) to
eligible firms for its Fuel Budgeting Program (the “Program”) to serve as a Qualified
Independent Representative (“QIR”) of the IBB in connection with the execution and delivery of
commodity swaps as part of the Program. The responses are due by email or fax on or before
12:00 noon (Eastern Standard Time) on Wednesday, April 5, 2017.
This is not an Invitation to Bid or a Request for Proposal under the Indiana Procurement
Code (Indiana Code 4-13-1.3 and Indiana Code 5-22). The IBB creates no obligation, expressed
or implied, by issuing this RFI or by receipt of any proposals submitted pursuant hereto. The
award of any contract as a result of this RFI shall be at the sole discretion of the IBB. Neither
this RFI nor any proposal submitted in response hereto is to be construed as a legal offer.
Background of the IBB
The IBB was created by the Indiana General Assembly in 1984. The purpose of the IBB
is to buy and sell securities and to make loans to political subdivisions of the State of Indiana
(the “State”). Since its creation, the IBB has issued over $21.6 billion in debt with
approximately $880.9 million currently outstanding. The Program is one of the most popular
programs offered by the IBB.
Fuel Program
Since 2009, the IBB has provided the benefits of the Program to certain local
governmental units in the State and certain State agencies. The Program provides those entities a
hedge against rising fuel prices for both diesel fuel and gasoline. This hedge is provided by
entering into commodity swap agreements with commodity swap providers for the benefit of the
entities. The entities purchase the fuel on their own based upon market conditions. A summary
of those commodity hedges since 2015 with respect to local governmental units, including
volume in gallons, pricing and number of participants, is attached hereto as ATTACHMENT A.
The IBB has entered into two commodity swap agreements that are currently in effect.
One is with Bank of Montreal, and the other is with Cargill, Incorporated. The commodity swap
agreements are attached hereto as ATTACHMENTS B and C.
2
In order to participate in the Program, the following steps need to be taken:
(1) completion of an application by the entity, which includes historic and projected
fuel usage;
(2) the application is subject to review by the IBB Municipal Advisor (Crowe
Horwath LLP) and approval by the IBB Board of Directors;
(3) the entity adopts the legal documents to participate in the Program;
(4) the entity elects the notional amount of the volume of fuel up to 80% of its
projected usage;
(5) the IBB enters into the hedge with the commodity swap provider for the benefit of
the participating entities.
Traditionally, the IBB enters into a commodity swap with a “costless collar” for the
benefit of local units of government each December. Those units can then choose to renew their
participation in another costless collar each year. Additionally, the IBB has entered into
commodity swaps with a “cap only” for the benefit of certain State agencies. The Bond Bank
has entered into such swaps from time to time, and there has been no fixed timeline for this
structure.
Clarification of Information
It is the responsibility of each respondent to inquire about and clarify any aspect of this
RFI that it does not understand. Questions for clarification must be addressed in writing to Ron
Mangus via email at rmangus@inbondbank.com. Written responses will be provided.
Respondents are advised that materials contained in the quotations are subject to the
Indiana Public Records Act (Indiana Code 5-14-3) and may be viewed and/or copied by any
member of the public, including news agencies and competitors. In the event that a respondent
submits any documents which the respondent believes are not subject to disclosure pursuant to
the Indiana Public Records Act, the respondent must: (1) conspicuously mark each such
document “CONFIDENTIAL” on each such page affected; and (2) clearly identify which
portion(s) of such page(s) are confidential.
Specifications/Qualifications/Statement of Work
The IBB is seeking to select a registered commodity trading advisor(s) to act as its QIR
for the purpose of assisting in the execution of commodity swaps for the Program. The firm
acting in this role must have demonstrated ability to assist the IBB in developing and executing
strategies designed to mitigate the risks associated with its commodities swap portfolio. The
selected registered commodity trading advisor must be adept at negotiating favorable commodity
swap agreement terms for municipal entities and provide those services to the IBB.
3
Services Required
1. Act as a QIR, which meets all requirements of Title 17 Chapter I of the Code of
Federal Regulations Section 23.450 with respect to advising non-ERISA “Special Entities” as
defined in Title 17 Chapter I of the Code of Federal Regulations Section 23.401 under the Dodd-
Frank Wall Street Reform and Consumer Protection Act of 2010 (“Dodd-Frank Act”). In
addition, make necessary representations and agreements to comply with the Dodd-Frank Act.
2. Assist the IBB with managing its commodity swap portfolio, including, but not
limited to, developing and executing portfolio management strategies.
3. Assist with negotiations of key documentation provisions.
4. Provide detailed reports, supported by independent quantitative analysis as
needed, to outline the rationale for any suggested initiatives. Those reports should address any
long-term implications of the commodity swap recommendations.
5. Participate in meetings and conference calls with the IBB, its consultants,
commodity swap providers, counsel and other team members as needed.
6. Provide guidance on statutory or regulatory matters related to commodity swaps,
including changes proposed or implemented by Congress, the U.S. Treasury, the Commodity
Futures Trading Commission and other regulatory agencies. Provide guidance on ongoing
compliance.
7. Provide such other swap commodity advisory services as requested by the IBB.
Please Limit your Responses to Six Pages
1. Make an affirmative statement that your firm is registered with the Commodity
Futures Trading Commission as a commodity trading advisor and is qualified to serve as a QIR.
Please provide a copy of your QIR Policies and Procedures as an appendix.
2. Provide name, title, location and brief background for key professional(s) that
would be affiliated with the IBB‘s commodity swap advisory assignments. Please include the
number of years of experience, number of years at the firm and experience applicable to those
transactions. Do not include resumes.
3. Utilizing no more than one (1) of the allotted six (6) pages, please highlight in
narrative form no more than three (3) engagements within the last two years in which your firm
has acted as a commodity trading advisor for entities that have goals similar to the IBB. Please
include the issuer name, commodity swap structure, the names of the commodity swap providers
and ratings.
4. Discuss your firm’s understanding of the IBB commodity swap portfolio, address
how your firm would approach a commodity swap advisory engagement with the IBB and
4
include any strategies for addressing ratings concerns as they relate to the IBB’s commodity
swap portfolio and any other methods that could mitigate some of the risks associated with the
portfolio, including, but not limited to, swap documentation or structuring enhancements.
5. Utilizing no more than two (2) of the allotted six (6) pages, please discuss why
your firm is best suited to act as the QIR for the IBB.
Fee Proposal
The IBB will compensate the QIR based upon each completed commodity swap
transaction. Please provide pricing information for the cost of your services for each costless
collar and cap only transaction completed by the IBB. Fees will be paid upon the completion of
a commodity swap transaction. Please note that the IBB may enter into a commodity swap with
an alternative structure.
No Contacts
The IBB specifically requests that no contact concerning this request for quotation be
made with any member, officer or employee of the IBB (other than Ron Mangus), Crowe
Horwath LLP (its Municipal Advisor), Barnes & Thornburg LLP (its General Counsel),
Maverick Sales Solutions, Inc., d/b/a Maverick Energy Consulting (its consultant), or the State
Treasurer's Office during the selection process. Failure to honor this request will be viewed
negatively in the selection process for commodity trading advisory services with respect to the
Program.
Dates and Selection Information
Please provide your response by e-mail, to bondbank@inbondbank.com or by fax at
(317) 233-0894 on or before 12:00 noon, on Wednesday, April 5, 2017. It is anticipated that a
selection will be made during the week of April 10, 2017. The IBB will select the proposer
which is the most qualified to serve as the IBB’s QIR. The selection shall be at the sole
discretion of the IBB and shall be based upon experience, the fee proposal and any other quality
or characteristic deemed in the best interests of the IBB and the Program.
5
ATTACHMENT A
SUMMARY OF COMMODITY HEDGES SINCE 2015 WITH RESPECT TO LOCAL
GOVERNMENTAL UNITS
Fuel Budgeting Program, Series 2017 A (Costless Collar)
Counter Party: Bank of Montreal
Number of Participants: 4
Commodity: Gasoline (RBOB)
Notational Quantity
Per Calculation
Date Period (GAL) Strike (Cap) Strike (Floor)
January 17 29,078 $ 2.0100 $ 1.6325
February 17 25,917 $ 2.0100 $ 1.6325
March 17 26,786 $ 2.0100 $ 1.6325
April 17 25,214 $ 2.0100 $ 1.6325
May 17 24,987 $ 2.0100 $ 1.6325
June 17 26,386 $ 2.0100 $ 1.6325
July 17 28,620 $ 2.0100 $ 1.6325
August 17 27,836 $ 2.0100 $ 1.6325
September 17 25,666 $ 2.0100 $ 1.6325
October 17 26,046 $ 2.0100 $ 1.6325
November 17 20,859 $ 2.0100 $ 1.6325
December 17 22,907 $ 2.0100 $ 1.6325
Total (GAL) 310,302
6
Fuel Budgeting Program, Series 2017 A (Costless Collar)
Counter Party: Bank of Montreal
Number of Participants: 7
Commodity: Diesel (ULSD)
Notational Quantity
Per Calculation
Date Period (GAL) Strike (Cap) Strike (Floor)
January 17 88,030 $ 2.0150 $ 1.6375
February 17 100,882 $ 2.0150 $ 1.6375
March 17 80,807 $ 2.0150 $ 1.6375
April 17 79,883 $ 2.0150 $ 1.6375
May 17 84,313 $ 2.0150 $ 1.6375
June 17 46,384 $ 2.0150 $ 1.6375
July 17 26,151 $ 2.0150 $ 1.6375
August 17 84,165 $ 2.0150 $ 1.6375
September 17 86,950 $ 2.0150 $ 1.6375
October 17 72,705 $ 2.0150 $ 1.6375
November 17 83,300 $ 2.0150 $ 1.6375
December 17 78,492 $ 2.0150 $ 1.6375
Total (GAL) 912,062
7
Fuel Budgeting Program, Series 2016 A (Costless Collar)
Counter Party: Bank of Montreal
Number of Participants: 4
Commodity: Gasoline (RBOB)
Notational Quantity
Per Calculation
Date Period (GAL) Strike (Cap) Strike (Floor)
January 16 25,189 $ 1.6225 $ 1.3160
February 16 25,495 $ 1.6225 $ 1.3160
March 16 24,198 $ 1.6225 $ 1.3160
April 16 24,649 $ 1.6225 $ 1.3160
May 16 24,896 $ 1.6225 $ 1.3160
June 16 26,803 $ 1.6225 $ 1.3160
July 16 23,650 $ 1.6225 $ 1.3160
August 16 27,750 $ 1.6225 $ 1.3160
September 16 22,542 $ 1.6225 $ 1.3160
October 16 26,883 $ 1.6225 $ 1.3160
November 16 22,033 $ 1.6225 $ 1.3160
December 16 23,873 $ 1.6225 $ 1.3160
Total (GAL) 297,961
8
Fuel Budgeting Program, Series 2016 A (Costless Collar)
Counter Party: Bank of Montreal
Number of Participants: 6
Commodity: Diesel (ULSD)
Notational Quantity
Per Calculation
Date Period (GAL) Strike (Cap) Strike (Floor)
January 17 65,311 $ 1.4950 $ 1.1900
February 17 82,006 $ 1.4950 $ 1.1900
March 17 64,391 $ 1.4950 $ 1.1900
April 17 70,192 $ 1.4950 $ 1.1900
May 17 69,873 $ 1.4950 $ 1.1900
June 17 36,595 $ 1.4950 $ 1.1900
July 17 19,355 $ 1.4950 $ 1.1900
August 17 59,049 $ 1.4950 $ 1.1900
September 17 73,042 $ 1.4950 $ 1.1900
October 17 56,270 $ 1.4950 $ 1.1900
November 17 64,002 $ 1.4950 $ 1.1900
December 17 77,589 $ 1.4950 $ 1.1900
Total (GAL) 737,675
9
Fuel Budgeting Program, Series 2015 A (Costless Collar)
Counter Party: Bank of Montreal
Number of Participants: 6
Commodity: Gasoline (RBOB)
Notational Quantity
Per Calculation
Date Period (GAL) Strike (Cap) Strike (Floor)
January 15 36,405 $ 2.0752 $ 1.5605
February 15 36,970 $ 2.0752 $ 1.5605
March 15 37,154 $ 2.0752 $ 1.5605
April 15 37,846 $ 2.0752 $ 1.5605
May 15 36,815 $ 2.0752 $ 1.5605
June 15 38,337 $ 2.0752 $ 1.5605
July 15 37,638 $ 2.0752 $ 1.5605
August 15 39,410 $ 2.0752 $ 1.5605
September 15 35,364 $ 2.0752 $ 1.5605
October 15 40,334 $ 2.0752 $ 1.5605
November 15 35,775 $ 2.0752 $ 1.5605
December 15 36,512 $ 2.0752 $ 1.5605
Total (GAL) 448,560
10
Fuel Budgeting Program, Series 2015 A (Costless Collar)
Counter Party: Bank of Montreal
Number of Participants: 8
Commodity: Diesel (ULSD)
Notational Quantity
Per Calculation
Date Period (GAL) Strike (Cap) Strike (Floor)
January 15 70,374 $ 2.3180 $ 1.7901
February 15 85,255 $ 2.3180 $ 1.7901
March 15 73,819 $ 2.3180 $ 1.7901
April 15 65,000 $ 2.3180 $ 1.7901
May 15 77,661 $ 2.3180 $ 1.7901
June 15 40,534 $ 2.3180 $ 1.7901
July 15 28,034 $ 2.3180 $ 1.7901
August 15 63,539 $ 2.3180 $ 1.7901
September 15 76,049 $ 2.3180 $ 1.7901
October 15 65,177 $ 2.3180 $ 1.7901
November 15 78,228 $ 2.3180 $ 1.7901
December 15 75,468 $ 2.3180 $ 1.7901
Total (GAL) 799,138
11
Fuel Budgeting Program, Series 2016 B (Cap Only)
Counter Party: Bank of Montreal
Number of Participants: 2
Commodity: Gasoline (RBOB)
Notational Quantity
Per Calculation
Date Period (GAL) Strike (Cap)
January 16 23,146 $ 1.6340
February 16 28,393 $ 1.6340
March 16 26,513 $ 1.6340
April 16 30,282 $ 1.6340
May 16 29,427 $ 1.6340
June 16 32,938 $ 1.6340
July 16 52,102 $ 1.6340
August 16 53,316 $ 1.6340
September 16 53,321 $ 1.6340
October 16 49,967 $ 1.6340
November 16 60,069 $ 1.6340
December 16 68,048 $ 1.6340
January 17 64,646 $ 1.6340
February 17 73,493 $ 1.6340
March 17 73,013 $ 1.6340
April 17 76,282 $ 1.6340
May 17 73,927 $ 1.6340
June 17 91,038 $ 1.6340
Total (GAL) 959,921
12
Fuel Budgeting Program, Series 2016 B (Cap Only)
Counter Party: Bank of Montreal
Number of Participants: 2
Commodity: Diesel (ULSD)
Notational Quantity
Per Calculation
Date Period (GAL) Strike (Cap)
January 16 11,161 $ 1.6228
February 16 10,492 $ 1.6228
March 16 12,696 $ 1.6228
April 16 10,199 $ 1.6228
May 16 8,331 $ 1.6228
June 16 10,421 $ 1.6228
July 16 39,293 $ 1.6228
August 16 48,221 $ 1.6228
September 16 43,486 $ 1.6228
October 16 40,307 $ 1.6228
November 16 47,269 $ 1.6228
December 16 151,758 $ 1.6228
January 17 402,161 $ 1.6228
February 17 373,592 $ 1.6228
March 17 163,696 $ 1.6228
April 17 89,199 $ 1.6228
May 17 98,731 $ 1.6228
June 17 118,421 $ 1.6228
Total (GAL) 1,679,434
13
Fuel Budgeting Program, Series 2015 B (Cap Only)
Counter Party: Bank of Montreal
Number of Participants: 1
Commodity: Gasoline (RBOB)
Notational Quantity
Per Calculation
Date Period (GAL) Strike (Cap)
July 15 43,000 2.1630
August 15 43,000 2.1630
September 15 33,000 2.1630
October 15 32,000 2.1630
November 15 25,000 2.1630
December 15 20,000 2.1630
January 16 20,000 2.1630
February 16 20,000 2.1630
March 16 22,000 2.1630
April 16 32,000 2.1630
May 16 29,000 2.1630
June 16 35,000 2.1630
Total (GAL) 354,000
14
Fuel Budgeting Program, Series 2015 B (Cap Only)
Counter Party: Bank of Montreal
Number of Participants: 1
Commodity: Diesel (ULSD)
Notational Quantity
Per Calculation
Date Period (GAL) Strike (Cap)
July 15 57,000 $ 2.2450
August 15 76,000 $ 2.2450
September 15 65,000 $ 2.2450
October 15 56,000 $ 2.2450
November 15 70,000 $ 2.2450
December 15 237,000 $ 2.2450
January 16 352,000 $ 2.2450
February 16 320,000 $ 2.2450
March 16 124,000 $ 2.2450
April 16 51,000 $ 2.2450
May 16 62,000 $ 2.2450
June 16 75,000 $ 2.2450
Total (GAL) 1,545,000
15
ATTACHMENT B
BANK OF MONTREAL COMMODITY SWAP AGREEMENT
16
ATTACHMENT C
CARGILL, INCORPORATED COMMODITY SWAP AGREEMENT
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