UBS has been dropped as a co-manager for a Laredo, Texas, bond sale in the wake of the company’s placement on the state comptroller’s list of fossil fuel industry boycotters, according to the deal’s financial advisor.
The move followed UBS’s voluntary resignation from a $44.4 million Kerrville, Texas, general obligation bond deal after it priced last Tuesday, a day before Texas Comptroller Glenn Hegar released the list.
Noe Hinojosa, president and CEO of Estrada Hinojosa & Company, financial advisor for $118.5 million of Laredo waterworks and sewer system revenue bonds scheduled to price this week, said UBS was removed as a co-manager and replaced with Wells Fargo after bond and underwriter’s counsel consulted with the Texas Attorney General’s office.
“Their feedback led us to believe that it was best for our client to have UBS replaced with Wells Fargo and eliminate any potential problems at closing by using UBS,” Hinojosa said in an email. ”While we believe that was our decision on this financing at this point, we remain hopeful that in days or months to come we have more clarity regarding the use of some of the firms like UBS.”
In a statement on Friday, UBS said it “firmly” disagrees with its inclusion on the comptroller’s list, “which is not substantive and will be harmful to Texas issuers and their constituents.”
UBS was the only bank that underwrites municipal bonds on the list of 10 financial companies determined to be boycotting energy businesses under a law aimed at protecting Texas’ oil and natural gas industry.
Placement on the list could also jeopardize UBS’ participation as a co-manager in an upcoming $3.4 billion Texas Natural Gas Securitization Finance Corp. bond sale. The corporation’s next meeting is scheduled for Thursday.
Under the law that took effect nearly a year ago, companies are required to verify they do not “boycott” energy businesses in order to obtain contracts valued at $100,000 or more with the state or local governments. UBS had submitted a verification in late September 2021, according to the Municipal Advisory Council of Texas website.