Handbook for Muni-Bond Issuers E-Book

Joe Mysak

• Herausgeber: John Wiley & Sons
• Kategorie: Fachliteratur
• Serie: Bloomberg Professional
• Sprache: Englisch

Seitenzahl: 215

Veröffentlichungsjahr: 2010

Beschreibung

From Bloomberg, the authority on municipal bond valuation, this is the first book to give issuers (municipalities and their officers, attorneys, and other advisers) step-by-step tips on (1) lowering the cost of financing and (2) how to do it right and avoid trouble--with the press, with the market, with constituents, and with the Securities and Exchange Commission. With an insider's perspective, Joe Mysak debunks the myths and reveals thepractical realities of today's municipal bond market. Fresh and clearly written, this excellent primer on issuing municipal bonds is a key to the market that no participant should be without.

Leseprobe

Table of Contents

HANDBOOK FOR MUNI-BOND ISSUERS

Praise

ATTENTION CORPORATIONS

Title Page

Copyright Page

Dedication

Acknowledgements

Foreword

Introduction

CHAPTER 1 - GETTING STARTED

Municipal Bond Types: GO Bonds and Revenue Bonds

Revenue Bonds and Authorities

The Cast of Characters

CHAPTER 2 - CHOOSING YOUR METHOD OF SALE

Politics Enters the Picture

Why Are So Many Deals Negotiated?

Subscription Sale

Don’t Run afoul of Regulators

How to Choose Your Debt Sales Team

CHAPTER 3 - GETTING ADVICE

How to Choose a Financial Adviser: Look Before You Leap

CHAPTER 4 - HOW TO SELL BONDS THE RIGHT WAY

Full Disclosure

Legal Advertising

Paying the Lowest Interest Cost

The Difference between Yield and Spread

Choosing Your Underwriter

CHAPTER 5 - THE ROLE OF THE UNDERWRITER

Pricing Municipal Bonds

What We Mean When We Talk About Structure

New Opportunities: Swaps

Fixed Rate or Variable Rate?

Short and Shorter

Good and Bad Underwriting

Don’t Be Snowed

CHAPTER 6 - HOW TO GET INTO TROUBLE

The New Regulatory Reality

IRS Scrutiny

CHAPTER 7 - THE BOND COUNSEL

Who They Are, and Why They Exist

Questionable Practices

CHAPTER 8 - WHO BUYS YOUR BONDS?

The Players

“The Evil Syndicate”

Other Strategies

CHAPTER 9 - PUBLIC RELATlONS

How to Win Bond Elections

The Press (Here’s What You’re Up Against)

CHAPTER 10 - WHAT HAPPENS IN A BOND SALE

What to Do Before a Competitive Sale

The Big Day

CHAPTER 11 - CREDIT RATINGS

Controversy at the Rating Agencies

The Rating Process

CHAPTER 12 - AFTER THE SALE

Reinvestment Strategy

RESOURCES

GLOSSARY

INDEX

About Bloomberg

About the Author

HANDBOOK FOR MUNI-BOND ISSUERS

IN TODAY’S HIGHLY STRATIFIED and heavily regulated municipal bond market, nothing can be left to chance. It is imperative that issuers have a working knowledge of the bond market and a solid understanding of all of its rules.

The Handbook for Muni-Bond Issuers provides professionals with succinct guidance on what issuers need to know before beginning the issuance process—choosing a method of sale, getting the right financial advice, disclosure and legal guidelines, and lowering the cost of financing. It includes a detailed discussion of what happens prior to a sale through what to expect after the close.

Author Joe Mysak takes issuers through the process, step-by-step, with smart answers and pragmatic strategies for success in today’s muni-bond market.

This book provides an insider’s perspective on:

♦ Choosing a method of sale

♦ Finding the right financial advisers

♦ What to expect from regulators

♦ Earning a high credit rating

Fresh and clearly written, this excellent primer on issuing municipal bonds, from an industry insider, is a key to the market that no participant should be without.

Praise forHandbook for Muni-Bond Issuersby Joe Mysak

“Joe Mysak has written the new bible for municipal bond issuers. The search is over; this book provides clear guidance and smart answers for everyone in the field.”

JAMES B. G. HEARTY Managing Director of Marketing and Client Services Relational Investors LLC

“Joe Mysak explains even the most complex subjects with a refreshing simplicity. He maintains his ever-present skepticism about much of what usually turns out to be flimflam in the guise of new products and financial engineering. This is a book for anyone, even investors without specialized financial backgrounds, who needs to understand what all the noise is about in a bond sale.”

FRANK R. HOADLEY Capital Finance Director State of Wisconsin

‘Joe Mysak has prepared a “pocket-sized financial adviser” for both large and small municipal bond issuers. The book provides a good mix of timeless as well as currently topical subjects. All recently elected public finance officials should read this book.”

CHRISTIAN McCARTHY Former Managing Director, Municipal Markets Merrill Lynch & Co.

”The Handbook for Muni-Bond Issuers is what public finance professionals want to have on their shelves, both a good read and a useful reference. Joe Mysak treats the fundamentals—and the foibles—of the municipal bond market in clear, concise language and takes time to tour some frequently bypassed, but very practical subjects, like winning bond elections and investing bond proceeds.”

JOHN PETERSEN Senior Consultant Government Finance Group

“Joe Mysak has once again proven that he’s the conscience of the public finance business.”

F. JOHN WHITE Chief Executive Officer Public Financial Management

“Joe Mysak’s book will guide any municipal finance professional through the labyrinth of bond issuance. His user-friendly style bypasses the usual esoteric and technical jargon. Finally, a book of practical solutions for any muni-bond issuer.”

ED ALTER Utah State Treasurer

ATTENTION CORPORATIONS

THIS BOOK IS AVAILABLE for bulk purchase at special discount. Special editions or chapter reprints can also be customized to specifications. For information, please e-mail Bloomberg Press, [email protected], Attention: Director of Special Markets, or phone [phone].

© 1998 by Joe Mysak. All rights reserved. Protected under the Berne Convention. No part of this book may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher except in the case of brief quotations embodied in critical articles and reviews. For information, please write: Permissions Department, Bloomberg Press, 731 Lexington Avenue, New York, NY 10022 or send an e-mail to [email protected].

BLOOMBERG, BLOOMBERG LEGAL, BLOOMBERG MARKETS, BLOOMBERG NEWS, BLOOMBERG PRESS, BLOOMBERG PROFESSIONAL, BLOOMBERG RADIO, BLOOMBERG TELEVISION, BLOOMBERG TERMINAL, and BLOOMBERG TRADEBOOK are trademarks and service marks of Bloomberg L.P. All rights reserved.

This publication contains the author’s opinions and is designed to provide accurate and authoritative information. It is sold with the understanding that the author, publisher, and Bloomberg L.P. are not engaged in rendering legal, accounting, investment-planning, or other professional advice. The reader should seek the services of a qualified professional for such advice; the author, publisher, and Bloomberg L.P. cannot be held responsible for any loss incurred as a result of specific investments or planning decisions made by the reader.

ISBN-13: 978-1-57660-023-8

The Library of Congress has cataloged the earlier printing as follows:

Mysak, Joe

Handbook for muni-bond issuers / Joe Mysak.

p. cm. -- (Bloomberg professional library)

Includes index.

1. Municipal bonds. I. Title. II. Series.

HG4726.M95 1998

332.63’ 233--dc21 97-52168

CIP

Acquired and edited by Steve Gittelson and Jacqueline Murphy

Graphs and charts by Myra Klockenbrink

For Jim Grant, and no wonder.

— J.M.

Acknowledgments

THE WRITER THOMAS WOLFE once wrote a story called Only the Dead Know Brooklyn. The title was an allusion to the sheer size of the borough, which before its inclusion into the City of New York at the turn of the century was once one of the biggest cities in America.

In similar fashion, we have the municipal bond market, which is vast, and which is particular and specific to a remarkable degree. No one can know the entire municipal market. This book is an attempt to distill 16 years of experience in covering this most fascinating of all credit markets into a brief and readable format. I have had a lot of help along the way.

First, I wish to thank James Grant and Jay Diamond at Grant’s, who in 1994 welcomed me into their publishing family. Grant’s Municipal Bond Observer, a fortnightly magazine aimed at the trade, was born. In 1997, they further endorsed the idea of launching a special magazine aimed at municipal bond issuers: Grant’s Municipal Bond Issuer. It was not until I put together a fortnightly magazine that I really became a student of the market. Jim and Jay are thorough professionals dedicated to putting out first-rate products, and are also good guys.

There are not many municipal bond journalists, but I have had a chance to work with the best ones, including John Allan, Bill Ryan, Craig Ferris, and John McCorry. These were my teachers.

And then there are my colleagues, the former merry band who comprised the staff of what we then termed the Greatest, Most Elite Newsgathering Organization in the History of the World, now sadly dispersed. These include Jack Doran, Steve Dickson, Dennis Walters, Lynn Stevens Hume, Vicky Stamas, Karen Pierog, April Hattori, Keith DuBay, Sean Monsarrat, Patrick Fitzgibbons, Jim Murphy, Ted Hampton, Aarons Pressman and Task, Kathie O’Donnell, David Gillen, Sharon King, Suzanne Montanaro, Susan Kelly, Christina Pretto, Rob Taylor, Maggie Soares, and Joan Pryde. These people made it a lot of fun to come to work in the morning.

This book would not have been possible without the active assistance of professionals in the field: Jim Hearty, Gary Killian, and Spencer Wright of Lehman Brothers; Christian McCarthy of Merrill Lynch; Jim Lebenthal; Doug Watson and Fran Laserson of Moody’s; Vlad Stadnyk of Standard & Poor’s; Byron Klapper and Frank Rizzo of Fitch Investors Service; Austin Tobin of Delphis Hanover; Mike Ballinger of MBIA; J.B. Kurish of the Municipal Issuers Research and Analysis Center; Sylvan Feldstein; and Jack Kraft of the American College of Bond Counsel.

Not a few issuers have helped me over the course of the years, including Utah’s Ed Alter, Frank Hoadley of Wisconsin, Jan Rzewnicki of Delaware, Bob Lenna of Maine, and Joe Lhota and Mike Geffrard of the City of New York. Three former bankers, Mike Lissack, Steve Strauss, and Bill Wood, helped me on the reinvestment of proceeds and yield-burning sections.

Special thanks, too, to Steve Gittelson of Bloomberg Press—who during a party at Janet Sullivan’s asked, “Do you want to write a book for us?”—and to my editor at Bloomberg, Jacqueline Murphy.

The glossary is largely drawn from the book I wrote with George J. Marlin in 1992, The Guidebook to Municipal Bonds, which was published by The Bond Buyer. The book is not only out of print, but also out of date, which goes to show how fast things have changed in the municipal market.

Finally, I would like to thank some friends for their support over the years, including the aforementioned Marlin, Patrick Foye, Mike Crofton, Mark Reed, Parker Bagley, and Steve Gustavson. And finally I would like to thank my wife, Susan Merett, who is also my best friend.

FOREWORD

BY MICHAEL R. BLOOMBERG

SOME YEARS BACK, The Bonfire of the Vanitiesauthor Tom Wolfe suggested to Joe Mysak that he write a book about the municipal bond market. Call it The Dark Continent, Wolfe suggested. You hold in your hands the result.

The municipal market is a vast place, and not a little scary for those not privy to its mysteries. Despite its intimate connections with all of us—look no further than the sewers and the side-walks beneath your feet for examples of things financed through the sale of municipal bonds-the municipal market has never really become a part of our financial culture.

The consequence is that most people probably know more about how to sell an initial public offering in the stock market than they do about selling municipal bonds. How do you choose a financial adviser, an underwriter, a bond counsel? How are bonds priced? How do underwriting syndicates work? Why do we need a credit rating? How do we pay all these people? This book takes you through the whole process, step by step.

The municipal market is, by any measure, big. It has been estimated that more than 80,000 entities have the authority to issue municipal debt. And every year, more than 7,000 of them do so, selling some 10,000 separate bond issues. As Joe Mysak points out, the municipal market is particular and specific to a remarkable degree. But there is a basic framework to all municipal bond transactions, and it is explained here.

That basic framework now includes heightened regulatory scrutiny. The Securities and Exchange Commission Office of Municipal Securities’s advice to issuers is simple and direct: You are responsible for your bond issues. You can rely upon the professionals you hire, but only up to a point. You have to understand exactly what is going on and why. Before you can do this, you have to know what questions to ask.

I believe Joe Mysak delivers solid advice on how to tap a market that has become a wonder of the (increasingly decentralized) world. I think you will find this book a reliable source of guidance and good practice.

A Few Notes on the Format

♦ This book packs a lot of information. It is designed to be functional as well as factual, trim enough to be carried in a coat pocket and taken on the road, and read easily on train, ship, or plane.

♦ The book’s organization accommodates your hectic schedule. The material flows logically and offers real-world applications at every turn.

♦ Graphics are designed with the busy reader in mind, highlighting important concepts from the experts in color throughout.