WASHINGTON — The Municipal Securities Rulemaking Board is urging municipal bond issuers to voluntarily make information about their direct bank loans available on the EMMA system.
In a notice issued Tuesday, the MSRB said making the information available will help ensure that investors and market participants have access to key market information that they can use when making investment decisions.
The board said investors often don’t know about issuers’ bank loans, or how those loans impact municipalities’ finances, because bank loans generally do not require the same amount of disclosure as municipal securities. State and local governments have increasingly turned to bank loans recently in order to meet financing needs, the MSRB said.
“The MSRB believes that the availability of timely information about bank loan financing is important for market transparency and promoting a fair and efficient market,” the release said. “Voluntary submission of information concerning bank loan financing through EMMA would provide timely access for bondholders, potential investors and other market participants to key information useful in assessing their current holdings of municipal securities, or in making investment decisions.”
The MSRB said the EMMA system provides a “convenient vehicle” for making bank loan information available to investors.
The board said issuers can submit information under the voluntary continuing disclosure category “Financial/Operating Data - Investment/Debt/Financial Policy.” They should indicate that the documentation is a “Bank Loan” disclosure. In the “Consisting of” text field, issuers can describe the purpose of the financing as well as other details.
The MSRB said issues can submit a range of other information about the loan, including security for repayment, payment dates, maturity and amortization information, any prepayment provisions, tax status of interest, third-party guarantees, the borrower’s credit rating, loan closing date, par amount, interest rates, events of default and remedies and redistribution rights, if any.