The municipal bond industry has experienced enormous growth and change over the last 25 years.
Sylvan Feldstein, director in the investment department of the Guardian Life Insurance Company of America, an institutional investor in municipal bonds, along with Frank Fabozzi of Yale University's School of Management, have updated and expanded their 1983 two-volume work, "The Municipal Bond Handbook."
The 2008 Handbook of Municipal Bonds contains 73 chapters and 21 case studies in 1,332 pages and provides an up-to-date reference tome on all facets of the industry. The roles of bond counsel, investment bankers, underwriters, traders, the SEC, and investors are described in detail.
I may be a tad subjective in my appreciation of the value of this book, since I wrote the chapter in the role of bond counsel in both the 1983 edition and the current handbook - but I think I'm right about the value of the new book. A foreward by Christopher "Kit" Taylor, former executive director of the Municipal Securities Rulemaking Board (1978-2007), attests to its timeless and importance to all participants in the municipal bond market.
I particularly like the logical organization of such a large book.
The first part covers the sell side and the originators of deals (i.e., the bond issuance steps). Part two covers the distribution and market-making roles on the sell side (i.e., the underwriter, the trader, the sales person, DTC). Part three contains the compliance chapters (i.e., Sarbanes-Oxley, the SEC, MSRB, Rule 2a-7). Part four has the chapters on applying fixed-income analysis to municipal products (i.e., evaluating municipal bonds with embedded options, indexed floaters, custom indices).
Part five covers chapters on the various types of investors (i.e. insurance companies, hedge funds, bond funds, high net worth investors). Part six contains the credit analysis sector chapters (i.e., airport bonds, land-secured bonds, housing bonds, continuing care retirement community bonds, and toll road bonds, among others). Part seven has chapters on the special security structures such as insured, refunded, and gaming bonds.
The case studies provide detailed information on a variety of topics such as the proposed $2 billion Hudson Yards bond issue, the bankruptcy of United Airlines, and even one describing a good and bad swap from the issuer's perspective.
The chapters and cases are written by leading experts in their respective fields. The chapters on the new synthetic instruments, such as derivatives, tender-option bonds, structured notes, rate locks, and swaps will be of interest to everyone - including issuers, trades, and investors.
With the problems of the bond insurers, credit research has become more important. The book's several chapters and cases in this area cover the high-yield, high-risk credit sectors, as well as the traditional credit sectors such as water and sewer bonds and general obligations. Approximately a third of the book covers the individual credit sectors. If global ratings come in as advocated by some public officials, individual credit analysis will be even more important to the institutional investor. The Handbook Of Municipal Bonds covers every major credit sector.
Lastly, I should note that an interesting section near the end of the book is Appendix A. It is a pictorial history of municipal bonds going back to Colonial times. The bonds shown are one-of-a-kind and of museum quality. In my 40 years of practicing municipal bond law, I have never seen such a collection of such unique municipal bonds. They document the rich history of the industry and the important role municipal bonds have played in building the infrastructure of our country.
The Handbook of Municipal Bonds was published by John Wiley & Sons Inc. John L. Kraft, Esq., of Lomurro, Davison, Eastman & Munoz PA wrote the handbook's chapter on the role of bond counsel.