WASHINGTON - The National Association of Bond Lawyers is urging the Treasury Department to clarify that multi-modal auction-rate securities can be treated as qualified tender bonds to avoid reissuance problems when they are converted to another interest rate mode - a move more issuers are pursuing as insurers face rating downgrades.

NABL made the plea in a letter sent to the Treasury late Monday that said the Internal Revenue Service needs to update its definition of qualified tender bonds. As the subprime mortgage crisis has resulted in actual or threatened rating downgrades for several major bond insurers, many issuers are considering converting their auction-rate bonds, which typically are insured, to other interest rate modes in an attempt to avoid higher interest costs.

Subscribe Now

Independent and authoritative analysis and perspective for the bond buying industry.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.