Since the release of the Securities and Exchange Commission's final municipal advisor registration rule in September 2013, the Bond Dealers of America and its members have dedicated significant efforts and resources to work with regulators, educate issuers and ultimately be prepared to make a successful implementation of the rule.
As the legal fight over Puerto Rico's Recovery Act heats up, Argentina and Arkansas provide roadmaps to what may lie ahead.
As many state and local governments across the country begin their July 1 fiscal year, a new federal law going into effect is of particular interest to municipal governments that issue bonds.
Of various possible exclusions and exemptions in the SEC's Municipal Advisor Rule, a handful are particularly likely to prove useful in easing disruptions in the underwriter-issuer/borrower relationship.
The long-awaited Water Infrastructure Finance and Innovation Act has the potential to play an important part in encouraging the use of P3s in the water and waste water sectors.
The inexorable drive to further underfund Pennsylvania's state-wide pension systems remains alive and well, under the guise of "pension reform."
Illinois and New Jersey are showing us how you should never, ever underestimate politicians' willingness to put off painful fiscal decisions.
Despite widely cited financial woes among both municipalities and monolines, guarantees have worked largely as anticipated to protect holders of insured securities.
Despite the warm spring weather, industry concerns over the SEC's Municipal Continuing Disclosure Cooperative Initiative have begun to snowball.
Like it or not, getting wealthy individuals to move to the Island in order to avoid U.S. taxes appears now to be a cornerstone of Puerto Rico's growth drive and is characteristic of the country's eternal search for a quick and painless way to grow.
Re-introducing the Build America Bonds program would once again drive much-needed infrastructure spending and broaden the buyer base to non-traditional taxable investors, while at the same time providing a complementary alternative to the currently challenged landscape of the traditional tax-exempt market.
A recent phenomenon is the emergence of bonds with shorter call protection as funding alternatives for municipalities. However, the shorter call protection also dampens the potential upside for investors, which in turn reduces the price they are willing to pay.
New York's budget leaves it at risk of becoming one of only five states that do not allow the use of design-build procurement to deliver public infrastructure projects.
The Commonwealth of Puerto Rico needs another "operation bootstrap" to spur its economy, a veteran municipal analyst says.
Scheduled negative amortization of pension liabilities is very common, can be perpetually increasing and is often unrecognized by many pension stakeholders and municipal market participants.
As protection of the retail and non-sophisticated market participant continues to be a priority for regulators, the new rule, G-47, clarifies obligations previously embedded in interpretive notices and makes clear that the time-of-trade disclosure obligation applies when you sell a municipal security to a customer, or purchase a municipal security from a customer, whether unsolicited or recommended, and whether in a primary offering or secondary market transaction.
With much of the angst around the debt ceiling silenced until 2015, Congress is unlikely to focus much on the municipal securities market, which means that the tax-exempt status of municipal debt is unlikely to be threatened in the near term. With that said, regulator cross hairs remained trained on the municipal market.
"One of these things does not belong" is a catchy slogan and it comes to mind when looking at the latest tax policy ideas coming from Washington when looking at the municipal bond tax exemption. The exemption is not a result of the growth of a tax code designed to induce or reduce certain behaviors. Rather, it is the foundation for the flow of capital in a $3.7 trillion dollar market required to efficiently finance the nation's infrastructure.
Land isn't the only thing drying up in California, as the drought's economic impacts are dangerously closing in on the state's financial resources.
Why is Proposed Rule G-47 pending approval by the Securities and Exchange Commission, and how will it differ from the existing rule? Why is this well-intentioned and, as some believe, needed rule the subject of an SEC order that has delayed its implementation?
The Securities and Exchange Commission used a combination of its antifraud authority and SEC Rule 15c2-12 in 2013 to raise the bar for issuers' secondary municipal market disclosures.
The first critical step in a municipal workout, whether inside or outside of bankruptcy, is to get all parties, the debtor and the creditors, to accept that they will all have to incur significant losses as a result of the workout process.
There is no easy, single answer to explain why Detroit or San Bernardino or Jefferson County and other local governments have resorted to bankruptcy in recent years.
Discount bonds performed worse because of the dreaded de minimis rule, under which buyers pay taxes on the gain at maturity at the ordinary income rate when the discount is large. But there is a silver lining taking a tax-loss can ease the pain.
The Government Finance Officers Association supports regulating those professionals who provide "advice" to state and local governments and believes that the Dodd Frank Act and the Municipal Advisor rule will help to ensure that those who provide advice have a fiduciary duty to their government clients.
It is going to be very difficult for the 2 million Puerto Ricans who do not live in poverty to pay $68 billion of principal, plus tens of billions of interest, plus uncertain amounts of swap termination fees, plus billions of unfunded pension obligations. How was it possible for all this debt to have been accumulated?
During October, Puerto Rico bond prices recouped a portion of their late-summer plunge that pushed yields above 10% for certain bonds. The rebound followed efforts by Commonwealth officials to address the island's wide-ranging fiscal challenges, plus speculation that the federal government might step in to assist Puerto Rico.
Puerto Rico's short term problems are tied to a Greece-like debt trap whereby policies aimed at reducing its fiscal deficit deepen a recession that further widens the deficit, with no end in sight to the vicious cycle.
In the guise of "bringing greater transparency and consistency to the analysis of pension liabilities," Moody's proposed an essentially "one-size-fits-all" approach to pensions that would effectively overstate pension obligations by applying an unreasonably low discount rate, said GFOA's Jeffrey Esser.
The Securities and Exchange Commission's $20,000 penalty on the Greater Wenatchee Regional Events Center Public Facilities District highlights the regulator's heightened focus on the municipal market.
Here is some advice to issuer's counsel regarding their role in bond issues.
In response to a recent commentary on the Securities and Exchange Commission's approval of a final rule defining municipal advisors, SIFMA agrees with Ms. Rodgers Caruso on an important point.
NAIPFA supports the practical, common-sense approach taken by the SEC and its office of municipal securities in writing its final municipal advisor rules, and believes that they will directly benefit the interests of issuers by creating a more robust, fair, competitive and transparent municipal market.
Congress is not honoring its Build America Bond promises to state and local governments, even as state and local governments are pledged to make payments to their investors and to rebuild the nations infrastructure critical to the future economy, jobs, and competitiveness of the country.
The city of Allen Park in Michigan is demonstrating a potential path for working through municipal financial stress by addressing issues relatively early on and by gaining important support from residents and the banking community.
After the Fed decided not to taper its stimulus program, muni investors may want to grab an airbag, as the market faces likely volatility in interest rates, fund flows, potential issuance and municipal bond relative attractiveness.
Bonds issued by the Commonwealth of Puerto Rico and related entities have experienced dramatic price swings since mid-August, amid shifting expectations about future supply and a growing media spotlight on the island's budget fundamentals.
Many cities and counties are paying substantially more in interest than is warranted by the real risk of their bond issues. How can local governments remedy this situation and thereby achieve better results for their taxpayers? Marc Joffe and Shannon Sohl believe the solution involves greater transparency.
There is undoubtedly considerable waste from inefficient advance refundings, but let's not throw out opportunities to save taxpayers' money, when warranted, by giving credence to half-baked theories based on shoddy scholarship, says Andrew Kalotay.
In the first half of 2013, we continued to observe a trend of increasing annual enforcement activity by the Securities and Exchange Commission, with a pronounced focus on the sufficiency and accuracy of the municipal market disclosures provided by state and local governments.
Over the years, Detroit's financial deterioration and the city's downturn have been well documented, so its bankruptcy filing came as little surprise to most market participants. This point can be reinforced by Interactive Data's analysis below of six different bonds issued by Detroit and related entities, which are representative of the types of debt and structures Detroit has issued.
A recent study of the economics of advance refundings asserts the provocative conclusion that "[t]he widespread practice of advance refundings of municipal bonds is, at best, zero net present value, though wasteful of fees." This study may well compel a counter-study from the many proponents of advance refundings.
Herbert J. Sims' Richard Larkin does not believe that Detroit had to file for Chapter 9 municipal bankruptcy.
The Detroit bankruptcy doesn't necessarily undermine the market for general obligation debt for all governmental borrowers.
Chicken Little is alive and well after Detroit's filing for Chapter 9 bankruptcy protection.