Miscellaneous
*UBS
Investment
Bank
UBS Securities LLC
200 South Orange Avenue, Suite 2000
Orlando, Florida 32801
Municipal Securities Group
Tel. +407.418.2440
Fax. +407.648.4529
name@ubs.com
vvww.ubs.com
'April 11, 2008
The Honorable Danny Kolhage
Monroe County Clerk and Chief Financial Officer
500 Whitehead Street
Key West, Florida 33040
Dear Mr. Kolhage:
I am in receipt of an electronic mail message from Marva Green, Supervisor of Special
Projects, that you have requested an explanation pertaining to UBS's pricing performance on
the outstanding Airport Variable Rate Revenue Bonds (Key West International Airport), Series
2006 (the "Series 2006 Bonds")..
Attached for your information and consideration is a table for the period from the week
ending July 21, 2006 through the week ending April 11, 2008 that compares the weekly
interest rates at which the Series 2006 Bonds were remarketed to the Securities Industry and
Financial Markets Association ("SIFMA") Swap Index. The SIFMA Index is produced by
Municipal Market Data ("MMD") and is a 7-day high-grade rnarket index cornprising tax-
exernpt variable rate demand obligations ("VRDOs") from MMD's extensive database. The
Index was created in response to industry participants' demand for a short-term index which
accurately reflected activity in the VRDO market and has been in use since 1991.
Since July 2006 the Series 2006 Bonds have priced on average 6 basis points (0.06%) above
the SIFMA Index. Because interest on the Series 2006 Bonds are subject to the alternative
minimum tax (" AMT"), one would expect the Series 2006 Bonds to price at interest rates
above the SIFMA Index because no AMT VRDOs are included in the SIFMA Index. Over the
last several months, the rnarket for variable rate debt has experienced unprecedented
turbulence. It appears some of that turbulence is reflected in the pricing levels of the Series
2006 Bonds during March 2008. While that is regrettable I would like to point out that the
pricing levels in April are significantly better, which I believe indicates a more stable market
and the continued effort on the part of the UBS Municipal Short Term Underwriting Desk to
obtain the best price for the County's securities.
Under Article 1(c) of the Rernarketing Agreernent between Monroe County, Florida and UBS
Securities LLC dated July 19, 2006, UBS is obligated to ".. .exercise on an ongoing basis its
best efforts to remarket such Bonds at a price of not less than 100 percent of the principal
amount thereof plus accrued interest, if any, to the date of purchase." Overall, I believe the
pricing performance for the Series 2006 Bonds demonstrates competitive pricing levels and
that UBS has fulfilled its contractual obligation.
UB5 Investment Bank Is a business group of UBS AG.
UBS Securities LLC Is subsidiary of UBS AG.
* UBS ~:~tment
The Honorable Danny L. Kolhage
April 11 , 2008
Page 2
However, reasonable people may disagree and as the County's Chief Financial Officer you
may have a different view of the record of performance for UBS on the Series 2006 Bonds.
In that event, the County has the ability to remove UBS as the Remarketing Agent on thirty
days notice pursuant to Article 8(a) of the Remarketing Agreement. However, we hope that
after reviewing the pricing data since the original issuance of the Series 2006 Bonds Monroe
County will be persuaded by UBS's record of performance to allow us to continue as your
remarketing agent.
Should you have any questions regarding this matter please contact me.
Regards,
~frn, ~~
Phillip N. Brown
Executive Director
UBS Securities LLC
Ene.
Cc: Marva Green, Supervisor of Special Projects
Hal Canary, Public Financial Management
Jeff Scruggs, Managing Director. Municipal Securities Group
Coleman Cordell, Managing Director, Southeast Municipal Securities Group
Chris Long, Municipal Short Term Underwriting Desk
Monroe County - Key West Airport
Variable Rate Demand Bonds, Series 2006
Trading History vs. SIFMA
sm. 2006
Averap: SU'MA Ave....:
347% 341%
A~el'. TftM
SIn_"
0.06%
2tlH6 SII' 'I \ I r.Hlin~
D.lh' \ RUBs lndn Spll'ad
07/21106
07/28/06
08/04/06
08/11106
08/18/06
08/25/06
09/01106
09/08/06
09/15/06
09/22/06
09/29/06
10/06/06
10/13/06
10/20/06
10/27/06
11/03/06
III 1 0/06
11117/06
11/24/06
12/01106
12/08/06
12/15/06
12/22/06
12/29/06
01105/07
01/12/07
01/19/07
01126/07
02/02/07
02/09/07
02/16/07
02/23/07
03/02/07
03/09/07
03/16/07
03/23/07
03/30/07
04/06/07
04/13/07
04/20/07
04/27/07
05/04/07
05/11107
05/18/07
OS/25/07
06/01107
06/08/07
06/15/07
06/22/07
06/29/07
3.67%
3.70%
3.50%
3.49%
3.70%
3.63%
3.45%
3.40%
3.58%
3.80%
3.80%
3.45%
3.60%
3.65%
3.63%
3.45%
3.72%
3.75%
3.72%
3.55%
3.40%
3.60%
3.90%
3.93%
3.48%
3.65%
3.63%
3.63%
3.50%
3.65%
3.68%
3.68%
3.52%
3.55%
3.62%
3.67%
3.67%
3.65%
3.72%
3.80%
3.94%
3.92%
3.94%
3.87%
3.87%
3.75%
3.62%
3.75%
3.75%
3.75%
3.56%
3.64%
3.44%
3.42%
3.65%
3.58%
3.41%
3.35%
3.54%
3.73%
3.74%
3.37%
3.51%
3.57%
3.56%
3.39%
3.63%
3.67%
3.63%
3.48%
3.40%
3.59%
3.89%
3.91%
3.45%
3.63%
3.62%
3.61%
3.50%
3.59%
3.65%
3.65%
3.51%
3.52%
3.60%
3.65%
3.65%
3.61%
3.70%
3.78%
3.92%
3.92%
3.91%
3.85%
3.83%
3.76%
3.61%
3.71%
3.73%
3.73%
0.11%
0.06%
0.06%
0.07%
0.05%
0.05%
0.04%
0.05%
0.04%
0.07%
0.06%
0.08%
0.09%
0.08%
0.07%
0.06%
0.09%
0.08%
0.09%
0.07%
0.00%
0.01%
0.01%
0.02%
0.03%
0.02%
0.01%
0.02%
0.00%
0.06%
0.03%
0.03%
0.01%
0.03%
0.02%
0.02%
0.02%
0.04%
0.02%
0.02%
0.02%
0.00%
0.03%
0.02%
0.04%
-0.01%
0.01%
0.04%
0.02%
0.02%
Monroe County - Key West Airport
Variable Rate Demand Bonds, Series 2006
Trading History vs. SIFMA
laiIm&>>_-"
3.47% 3.41%
A~~I. ,r..l' II.
.*~
.. ,..",.,.." .
0.06%
2006 "II \1 \ II ,ldill~
1>.1 I i..' \ RUBs Indn. Spn'.HI
07/06/07
07/13/07
07/20/07
07/27/07
08/03/07
08/10/07
08/17107
08/24/07
08/31/07
09/07/07
09/14/07
09/21/07
09/28/07
10/05/07
10/12/07
10/19/07
10/26/07
11/02/07
11/09/07
11/16/07
11/23/07
11/30/07
12/07/07
12/14/07
12/21/07
12/28/07
01/04/08
o 1/1lI08
01/18/08
01/25/08
02/01/08
02/08/08
02/15/08
02/22/08
02/29/08
03/07/08
03/14/08
03/21/08
03/28/08
04/04/08
04/11/08
3.62%
3.61%
3.61%
3.63%
3.53%
3.53%
3.77%
4.04%
4.04%
3.92%
3.77%
3.77%
3.82%
3.62%
3.59%
3.52%
3.47%
3.27%
3.42%
3.57%
3.62%
3.62%
3.44%
3.12%
3.32%
3.42%
3.12%
3.02%
3.02%
3.02%
2.39%
1.78%
1.33%
2.33%
3.08%
3.33%
3.25%
2.75%
2.75%
2.05%
1.55%
3.60%
3.58%
3.61%
3.61%
3.52%
3.51%
3.69%
3.89%
3.95%
3.85%
3.73%
3.77%
3.84%
3.56%
3.55%
3.49%
3.43%
3.26%
3.41%
3.54%
3.58%
3.58%
3.40%
3.09%
3.16%
3.42%
3.06%
3.02%
2.93%
2.78%
2.20%
1.73%
1.24%
2.37%
3.16%
2.96%
2.75%
2.33%
2.21%
2.00%
1.80%
0.02%
0.03%
0.00%
0.02%
0.01%
0.02%
0.08%
0.15%
0.09%
0.07%
0.04%
0.00%
-0.02%
0.06%
0.04%
0.03%
0.Q4%
0.01%
0.01%
0.03%
0.04%
0.04%
0.04%
0.03%
0.16%
0.00%
0.06%
0.00%
0.09%
0.24%
0.19%
0.05%
0.09%
-0.04%
-0.08%
0.37%
0.50%
0.42%
0.54%
0.05%
-0.25%
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