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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