Issuing and selling municipal bonds to investors is a complex process that can be derailed by politicians looking for headlines.
"You have elected officials trying to score points to get elected," said Richard Li, principal debt management specialist for the state of Connecticut.
"Your municipality might be in tough financial shape, and they start throwing around the B-word. You got to drill it into these guys. Never use the B-word."
The B-word refers to "bankruptcy," and the comments came during the Government Finance Officers Association's Mini Muni Conference on Thursday.
Overcoming a bankruptcy by issuing new bonds is not impossible but it does require an all-hands-on deck approach.
"Having come out of the Detroit bankruptcy, there was a great deal of pressure on us to improve our bond rating, which is not a simple endeavor," said Kim Garland, deputy chief financial officer for the Great Lakes Water Authority.
"All our executive leadership participates in the rating agency presentations and in the development of the of the preliminary official statement. For us, it's once a year, but it's a very coordinated effort."
In addition to tapping in-house expertise, successful issuers will often bring outside contractors into the process.
"It's really important to get your internal team along with your external engineers on board early in the process, long before you're really even codifying what it is you want to go forward with," said Jessica Williams, chief financial officer for New Braunfels Utilities in Texas.
"When you get to your city council or your board, nobody is surprised at what your terms are. You're all on the same page, and you can all speak to it if you are asked."
Issuing credits from a state often starts with a referendum that needs to be passed up to two years before going to market.
"You have to have all the legal resolutions in place," said Li. "That either has to be prepared by in-house counsel, or if you're not doing it on a regular basis, you're going to need your bond counsel to prepare all the authorizing resolutions."
As the issue gets closer to market, timing on a long-term-basis narrows down to what other issuers are doing and benchmarks on the federal calendar.
"You have to pay attention to things like when the Fed meeting is," said Li.
"When are your financial reports coming out? You don't want to print a Preliminary Official Statement, your audit comes out a week later, and then you have to update the POS."
"It (the sale) tends to be better to come at the beginning of the month and the end of the month, because that's when all the Separately Managed Accounts tend to have all the funds for reinvesting."
"In certain months like July, there's a lot of municipal bond maturities and interest payments, that's a good time to get all the reinvestment money."
Shrewd issuers at the county level keep an eye on when their neighbors are coming to market to avoid head-to-head competition.
"Pretty much everyone in the area is triple A," said Jason Friess, debt manager for Arlington County, Virginia, adding that the county is mindful of when other triple-A issuers are coming to market to avoid too much crowding.
"We may even push it (sale) to the following week or try to go before, because we know that it might be the same investment firms looking to take down our deal."
