Municipal disclosure

The state's new accounting system gets the blame again for California's second year with an extremely late CAFR.

Potential fiscal fallout from the police killing of George Floyd and the pandemic's economic strains brought a negative outlook to the city's AAA S&P rating.

A Government Finance Officers Association-led working group put out recommendations this week on timely and pandemic-related disclosure.

The number of COVID-19-related disclosures reached almost 1,200 filings, but not all filings mean municipalities are being directly impacted by the virus.

The total number of COVID-19 disclosures reported to EMMA for the week ending Aug. 9 was about 700, down from nearly 1,000 the previous week.

Market participants say issuer coronavirus disclosures have stagnated due to tax season and issuer fears of future legal ramifications.

Cyberattacks are increasingly likely as more government employees work from home due to the coronavirus pandemic, analysts said.

Coronavirus-related disclosures last week reached to just over 600 filings, but it is still a far cry from just less than a month before which saw 1,200 filings.

Analysts had mixed reactions on what could have caused the decline, pointing to some municipalities closing out their fiscal years at the end of June.

Besides navigating coronavirus market disruption, investors also find themselves dealing with the increasingly important and often inconsistent climate risk disclosure.

Primary market COVID-19 disclosures increased to 2,926 filings from 2,529 the week prior. Continuing disclosures increased to 6,107 filings from 5,677.

Municipalities are making draws on reserves as revenues fall due to the pandemic.

The SEC has asked for more timely, voluntary disclosure from issuers of municipal bonds.

State and local governments have increasingly filed COVID-19-related disclosures to the market, but only about 931 issuers out of roughly 40,000 have filed over 1,500 material event notices and continuing disclosures since the pandemic began.

The announcement comes at a pivotal time for the municipal market as the SEC released a statement earlier this month detailing the kinds of coronavirus disclosures municipalities should be making.

The MSRB also said more municipalities have begun referencing CARES Act loans in their disclosures.

It is feasible that not all COVID-19 filings are or will be material but one may want to err on the side of caution in this regard.

More issuers are missing bond payments and deadlines for filing annual financials; the Roman Catholic Church of the Archdiocese of New Orleans filed for bankruptcy partially blaming COVID-19, affecting $41 million of bonds.

Mark Kim, MSRB chief operating officer, predicted even more disclosures in the near future.

The SEC encouraged issuers to provide investors with forward-looking information as to how the pandemic will affect future finances.