3 Info Flashcards
(24 cards)
Issuing Muni Process
- issuer gets legal opinion
- terms set by
a. negotiated underwriting
b. competitive bid
3. Buyer publishes visual supply (# to be issued)
Visible Supply vs. Interest
visible supply high, interest high
visible supply low, interest low
Bond Buyer Indeses
40 Bond Index (BI)
20 Bond Index
11 Bond Index
Revdex 25
Thompson Muni Monitor
real time info
secondary mkt
syndicates
effect risk
spread risk of UW among
multiple UW
Average Life
(years)
Syndicate Letter or Contract
indicates agreement w/ terms
not legally binding till
syndicate submission of bid
Eastern Account
Western Account
undivided
pool UW then portion issued & unsold bonds
Eastern Account
Western Account
divided
ony responsible for own UW allocation
UW does not get others unsold bonds
Syndicate Bid
Low interest
competitive for public
Syndicate Bid
Compare bids
- Net Interest Cost (NIC)
- True Interest Cost (TIC)
- combines amt issuer rcvs w/ total int paid
- adjusted for time value (weighs early interest heavy
Syndicate Bid
Split-Rate Bid
vids w/ multiple int rates
determined by lowest ave int cost to issuer
Syndicate Bid
Settlement
30 days after issuer deliveries securities
Reoffering Price / Yeild / Scale
price bonds sold to public
Production
total dollars earned from sale
spread
production ($ earned from sell)
less amt bid to issuer
Spread is
Profit
concession
the selling group’s payment
Added Take Down
syndicate payment
reallowance
discount from reoffer
MSRB
Municipal Securities Rule Making Board
- order allocation
- order period
- allocation priority
MSRB
Allocation Priority
Outlined in syndicate Agreement
- Presale Orders - before syndicate wins bid
- Group Net - after bid awarded
- Designated Order - take down alloated to specific syndicate
- Member Order - member firm wants
Pro Golfers Don’s Miss
Unqualified Legal Opinion
Qualified Legal Opinion
bond council found no problems
Unqualified Legal Opinion
Qualified Legal Opinion
issue is legal
qualification necessary
because contingencies exist
