Bond Data Providers March Toward the Future

LOS ANGELES — The internet and laws fostering transparency have resulted in an environment where a plethora of information about municipal bonds is available.

Having raw data available doesn’t necessarily result in increased transparency unless that data is sorted into useful data sets, according to speakers on a panel here at The Bond Buyer’s California Public Finance Conference.

Panelists provided insight into what is available to municipal bond investors trying to find better information to make better investing decisions.

Justin Pica, director of product management and market transparency for the Municipal Securities Rulemaking Board, said they receive 12,000 documents a month.

“We try to take the data we collect and paint a little bit of a picture of what we are collecting over the months,” Pica said. “We aren’t resting on our laurels; we have published a long-range plan.”

The MSRB has designed websites for each state where users of the site can access all the financial data that the board has for that state. They have created an advanced search engine that makes it easier for site users to find information without having the CUSIP number, but they are also currently seeking comment on how they can improve the way they offer data.

They want to create a centralized venue for states and other municipalities to provide data for investors. While some issuers have their own websites -- and sometimes multiple places people can access financial information about the issuer -- that isn’t true for smaller issuers, Pica said.

“We are going to make a strong push next year to work with as many issuers as possible,” Pica said.

With 1.5 million municipal securities, MSRB wants to make it easier for users to find the information they need; and for issuers to provide information to investors.

They are also working to provide more real time data on trading activity in the secondary market.

Having firms who provide data on the municipal markets levels the playing field, so the bank isn’t simply the owner of an issuer’s information, according to Neil Nemeroff, IPREO’s managing director for product and content for global research sales and trading.

“The key is obtaining actionable intelligence, or getting information that is effective,” Nemeroff said.

Nemeroff showed how generating information about what categories of bonds investors typically purchase including states, regions and category such as education can help underwriters determine who to market bonds too.

Charts posted by Nemeroff showed why evaluating data of what investors are targeting also indicates why bond sellers need to make sure they target different groups, not just sell bonds to the same group of investors.

For instance, when he ran data producing charts showing who is holding education, 51% of those bonds were held by mutual funds. If he changed the search to California, education, and housing, the percentage jumped to 77% owned by funds.

Gregg Beinstock, co-founder Lumesis, Inc., said they have created a geo score rating. It’s not a rating in the sense of what the rating agencies provide, Beinstock explained.

A “geography” score looks at the economic well-being of a region based on income, employment and housing. Lumesis updates the information monthly.

All of the states and counties have a geo score; and when it’s completed they will make it available for free on their website, Beinstock said.

The geo score will provide information to investors about the economic health of an area, which is information that can be particularly helpful when purchasing bonds by smaller issuers where less information might be available.

One area all of the panelists would like to see better information in is pricing data, but Bart Mosley, president of Trident Research, who moderated the group, said there is a limit to how good this can get.

“The market is starving for real-time pricing,” said Al Turello, senior director of evaluated services for Interactive Data. “That is something we are working toward.”

Interactive Data is working with academia to create products that provide real-time pricing and link back to products they have created, Turello said.

Beinstock said they are looking at products that include smaller issuers in the mix, because buyers are not always going to find information about them in the marketplace. They are focused on looking for better ways to answer the needs of investors, he said.

The changing landscape of the municipal markets will always impact what the needs are for data, Mosley said.

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