WASHINGTON – The Municipal Securities Rulemaking Board on Wednesday rolled out a new online course to help municipal issuer officials by taking them through the steps of a bond financing and providing them with key information about the various participants.
The new course, called “Being an Informed Municipal Bond Issuer,” is approximately 45 minutes long and is based on two possible financings, a water treatment facility and a hotel and convention center. The course is part of the MSRB’s collection of online classes called MuniEdPro. While the new class designed for issuers is free, the other classes on topics like roles of market participants in fixed rate primary offerings are $45 each. While the course is designed for issuers anyone can use it.
The course starts with the town’s water treatment facility and gives users information about the need for an upgrade to the facility. It then explains the request for proposal process and gives several considerations for issuers when choosing other participants in the transaction. It advises that issuers pay attention to a participant’s past experience in that specific area of issuance as well as any potential conflicts that the participant may have, among other things.
After getting a basic overview of the roles of participants like underwriters, municipal advisors, and bond counsel, users have the opportunity to read about three MAs, three underwriters, and three bond counsels before choosing one of each that is the best fit for the deal. Each participant has varied past experiences with muni offerings.
The course then provides information about securities law and financing considerations as well as the general timeline for the underwriting process. Ultimately, the user is able to virtually cut the ribbon on the new water treatment facility upgrade. Those working through the course are then reminded of issuers’ continuing disclosure duties following issuances.
After taking a short, multiple-choice quiz on the information presented, issuers move on to the hotel and convention center financing, which is designed to get them thinking about the risks associated with financings. The program lists several questions for issuers to consider including whether there is demand for the project, market saturation, and enough business to generate sufficient revenues.
Users are once again able to choose an underwriter, MA, and bond counsel from lists of three that have varying qualifications and past experiences. They are then taken to a window that outlines the various risks associated with the issuance, including litigation risk, sector risk, and market saturation. The bond counsel the issuer chooses walks through each kind of risk presented before asking how the issuer wants to handle it.
At the end of the program, there is a short review of the risks covered followed by a test on the information that was presented in both offering scenarios. Issuers must get at least a 70% to pass. There is also an opportunity to use a menu to revisit any previously covered sections before taking the final test.