Use LEFT and RIGHT arrow keys to navigate between flashcards;
Use UP and DOWN arrow keys to flip the card;
H to show hint;
A reads text to speech;
34 Cards in this Set
- Front
- Back
What is a debt ceiling?
|
A level decided on by a voter referendum or by statutes that states a muni cannot have debt above this line
|
|
When is a feasibility study required? |
Before the issuance of a revenue bond
|
|
What is the difference between a negotiated sale and a competitive sale?
|
A negotiated sale is when the muni selects its underwriter, and the size of issue, coupon, call rates are decided during negotiation. Competitive sale is when B-D's compete against each other for the bid
|
|
What are the two different syndicate liabilities?
|
Divided Account: each member of a syndicate is responsible for a specific percentage of an issue Undivided Account: Each member is responsible for a specific percentage of the unsold balance, regardless of how much they sold before |
|
What is a reoffering scale?
|
These are the yields that future bondholders will receive for each maturity within an issue
|
|
How is the spread broken up in a muni offering?
|
Part of the spread goes to the Manager of the syndicate. The rest is called the Total Takedown. Within the TT there is the concession, the part that goes to the person who negotiated the sale, and then the additional takedown, which goes to the syndicate member responsible for selling this part of the issue
|
|
Priority of Orders in a Muni Offering
|
Presale Orders: Placed prior to the awarding of issue to syndicate Group Net Orders: Profit shared by all members of syndicate Designated Orders: Profit is directed to dealers designated by customer Member Orders: One member earns total takedown |
|
Related Portfolio Order
|
An order is entered as this to disclose to syndicate manager whether it is entered for a unit investment trust or for an accumulation account to be used by a UIT
|
|
What is the legal opinion on a muni issue? |
A recognized bond counsel must review an issue and makes sure it is legal, then the unqualified legal opinion will be printed on each issue
|
|
What is the official statement for a muni offering?
|
This document serves as a prospectus but it does not need to filed with the SEC. If produced it must be distributed to investors
|
|
What is EMMA (Electronic Municipal Market Access)?
|
EMMA is the dataport through which muni bond underwriters submit specific documents
|
|
Until a settlement date is offered, what basis do bonds trade on?
|
Until settlement (typically 30 days after securities are awarded to underwriter) bonds trade on a when issued (WI) basis
|
|
New Issue Confirmations for Negotiated Sales, what is required to be provided to customer?
|
No later than the settlement date the customer must receive: Amount of the underwriting spread, amount of any fee received by B-D, initial reoffering price for each maturity in offering
|
|
What is position trading for a muni bond trader?
|
The trader works to maximize a firm's position (amount invested) in a particular security based on the expectation the price will rise due to a decline in interest rates |
|
What does this quote mean: 100M New York State 4.00 7-1-30 @ 6.25 - 1/2 C20 @ 100
|
Offering is for $100,000 face value of 4% New York State bonds that mature July 1, 2030 and are callable beginning July 1, 2020 at 100. Bonds are offered at 6.25% yield less 1/2 point dealer concession
|
|
Difference between a firm bid and an out firm?
|
A firm bid is a straight up bid for a security that won't change while an out firm is when a dealer commits itself to honor the quote for a set period.
|
|
All or None Offer
|
Purchaser must be willing to purchase all of the securities being offered
|
|
Fill or Kill
|
Purchaser must be willing to immediately purchase all securities at offering price or the quote will be withdarwn
|
|
What is the difference between a locked market and a crossed market?
|
A locked market is when the bid and offer are the same, a crossed market is when the offer is for less than the bid
|
|
The Bond Buyer
|
An online newspaper of the muni industry which contains statistics related to teh muni bond market. Some of the stats are the 30 Day Visible Supply (all muni securities expected to reach market over the next 30 days), Bond Buyer Placement Ratio (dollar amount of bonds sold by underwriting syndicates as a percentage of bonds issued in the week)
|
|
What indexes does the Bond Buyer display info on?
|
20 Bond Index 11 Bond Index Revenue Bond Index Bond Buyer Municipal Bond Index SIFMA Index Municipal Market Data Curve |
|
What are the marketability factors to think about when considering a bond issue?
|
How is the credit of the issuer? How long will it take to mature? How is the insurance to cover the issuer? How is the yield for the bond against its safety of return? |
|
What act requires dealers that muni transactions dealers are registered with the SEC?
|
Securities Acts Amendments of 1975
|
|
Who is responsible for enforcing MSRB rules?
|
For B-Ds: SEC or FINRA For banks: Comptroller of the currency for nat'l banks, federal reserve board, FDIC for non-national banks that are not members of FRB |
|
What is required by MSRB when opening a new account for a customer?
|
Customer's name and address Whether customer is of legal age Occupation Name and address of employer Is customer employed by a B-D SSN or Tax ID |
|
What are the requirements of a syndicate manager when underwriting a muni bond sale?
|
Must maintain books/records which include: settlement date with issuer, allotment of securities and sale prices, names of syndicate members and percentage of liability. Must allow disclose to syndicate members all info regarding payments on orders within 10 biz days of sale Distribute any sales credit owed within 10 calendar days following security delivery date |
|
MSRB Political Contribution Rule (G-37)
|
Municipal Finance Professionals cannot make political contributions due to the relationship with muni bonds, and if contributions are made firms are banned for two years from conducting business with issuers. If the contribution does not exceed $250 it is not a violation
|
|
Settilement Date for Muni Transactions
|
For a cash settlement txns are completed same day, for regular way settlement settlement is reached on the third business day after trade (T+3)
|
|
Good delivery of munis requires: |
Bearer bonds have all unpaid coupons attached A legal opinion is imprinted or attached Bonds are in $1,000 or $5,000 increments Bonds have not been called |
|
Rejection and Reclamation of Munis
|
Rejection is the refusal to accept a delivery of securities. Reclamation is the return of securities that were previously accepted for delivery.
|
|
Confirmations to a customer must be sent when: |
At or before the completion of the transaction. Typicaly the settlement date
|
|
A confirmation sent to a customer must include:
|
Trade date and settlement date Description of securities, par value, issuer interest rate, maturity, type of bond, call feature Price and Yield Amounts of accrued interest, principal, total for txn Capacity in which B-D acted (agent or principal) |
|
What is a control relationship?
|
When a B-D controls an issuer or a person who influence over the debt service of the issuer's securities
|
|
Contents of a Typical Notice of Sale
|
Date, time and place of sale Name and description of issuer Type of Bond Terms and Conditions Bidding Restrictions Interest payment dates Dated date, interest accrual date, first coupon payment date Maturity Structure Call provisions Denomations and Registration Provisions Expenses to be borne by the purchaser or issuer Paying Agent and/or Trustee Name of attorney providing the legal opinion Detail of delivery Right of rejection Criteria for Award |