July 17, 2014
Following the 7 point rise in the Bond Buyer's 20-Bond Index® on July 10, the Index slipped 2 basis points to end this week at 4.36. The coming week's calendar of new issues has a strong offering of general obligation bonds, which may generate some additional enthusiasm from the retail sector.
On July 1, new rules by the Municipal Securities Rulemaking Board (MSRB) went into effect. Some of the more important ones are that no longer can a municipal advisor* change its role to an underwriter of the same issue. Another rule provides that an underwriter may no longer offer a proposal for a bond issue to an issuer unless that issuer has retained an independent registered municipal advisor. These new rules should go a long way in reducing some of the unethical practices of the past.
Another new rule, referred to as "time of trade disclosures" requires municipal bond dealers and brokers to provide in writing or orally all currently available information on a security prior to making a purchase from or sale to a client.
* The terms "municipal advisor" and "independent registered municipal advisor (IRMA)" have been established as a replacement for "financial advisors" because that is what stock and bond salesmen now call themselves.
Below are links to The Bond Buyer's ® 20- Bond Index along with a chart showing the trend of the Bond Buyer's ® 20-Bond Index for the past two years. For those interested, we have data for prior years and will be pleased to provide it upon request.
The Municipal Securities Rulemaking Board's EMMA system is now mandatory for new issue disclosure as well as continuing disclosure. Both the preliminary and final official statements can be downloaded from the following web address: EMMA. And now, information on bond ratings has been added.
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Modified July 21, 2014