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In its latest effort to
promote transparency for investors, the MSRB recently published a second advisory promoting more transparency of
undisclosed debt of municipal bond issuers. The MSRB is
concerned that investors and other market participants are often unaware of the
potential impact of bank loans and other debt-like obligations on the seniority
status of existing bondholders and the credit or liquidity profile of an
issuer, among other implications.
The MSRB has been
encouraging state and local governments to disclose bank loans voluntarily on
the MSRB’s Electronic Municipal Market Access (EMMA®) website since 2012, when the MSRB the released its first notice on bank loans. While
many hundreds of bank loans by municipalities are outstanding, only 88 bank
loan disclosures have been properly submitted to EMMA in that time.
In its advisory issued in January, the MSRB recommends that issuers voluntarily disclose bank loan information through EMMA. Issuers should also have a full understanding of the terms of a bank loan and its implications for existing debt.
In addition to its
leadership on municipal disclosure, the MSRB last month offered to assist any efforts by the Securities and
Exchange Commission (SEC) to review the federal municipal market disclosure
regime established by SEC Rule
15c2-12. The MSRB suggested that the SEC look to its disclosure standards for
the corporate market as a precedent for disclosure of off-balance sheet
obligations such as bank loans.
Read about the MSRB’s market leadership
on bank loans.
At its January Board of
Directors meeting, the MSRB continued to advance its development of a
professional qualification exam for municipal advisors by agreeing to the scope
and content of the exam. The MSRB plans to file with the Securities and Exchange Commission
(SEC) a content outline of the topics to be covered by the test. The outline
also provides sample questions and reference material to assist municipal
advisor professionals in preparing for the exam.
The outline will be filed
after the SEC completes its review of a related MSRB proposal to establish two classes of
municipal advisor professionals –
representative and principal – both of whom would be required to pass a basic
competency examination. The proposed Series 50 exam will cover the role
and responsibilities of municipal advisor professionals as well as the rules
and regulations governing their activities.
The MSRB invites municipal
advisors to participate in a pilot exam later this year to help validate test
questions and determine the passing score for the exam. Click here to receive
email updates about the pilot test.
In addition to advancing
its professional qualification test, the Board considered comments received on draft amendments to MSRB Rule G-20 on gifts and
gratuities to extend the rule’s provisions
to municipal advisors. The MSRB intends to file a revised proposed rule with
the SEC.
View a complete summary of the MSRB’s January Board
meeting.
Municipal securities trading, which is reported
directly to the MSRB by dealers, decreased last year compared to a year earlier. Par
amount of municipal securities traded decreased 11 percent in 2014 while the number of trades decreased
16 percent in 2014 compared to 2013.
A more in-depth view of municipal trading and other
statistics will soon be available in the MSRB’s annual Fact Book. It will be published later this month and contain
detailed statistics on trading activity across different types of trades and
municipal securities, as well as statistics on yield distributions, continuing
disclosure and interest rate resets. Additionally, the MSRB will be seeking input on how
to improve its Fact Book through a short survey.
For additional information on municipal new issuance and
trading activity, continuing disclosures or variable rate resets, visit the MSRB’s EMMA website.
SEC
Request for Extension of Time on Proposed Amendments to MSRB Rule G-3 to Create
Municipal Advisor Professional Qualifications February 12, 2015
Bank
Loan Disclosure Market Advisory January 29, 2015 |
