What is official statement municipal bonds?

What is official statement municipal bonds?

MONITORING BONDS. What Is an Official Statement? An official statement is a document prepared by or on behalf of a state or local government in connection with a new issue of municipal securities. In some respects, an official statement is comparable to a prospectus for a corporate equity or debt offering.

What is included in a bond issue official statement?

An official statement describes the essential terms of the bonds. It typically provides the most detailed description of the terms and features of the bonds through maturity, unless and until these terms have been modified.

How are municipal bonds reported?

Even though the interest you earn on your tax-free municipal bonds isn’t taxable, you’ll still need to report it to the IRS. At tax time, you’ll receive a Form 1099-INT, Interest Income, from the bond issuer. In Box 8, Tax-Exempt Interest, you’ll see the tax-exempt interest you earned during the tax year.

What are the disclosure requirements for a new issue of municipal securities?

Issuers must disclose any default, event of acceleration, termination event, modification of terms, or other similar events under the terms of the financial obligation of the issuer or obligated person, any of which reflect financial difficulties. A failure to comply with the undertaking would be a breach of contract.

How long do municipal bonds take to mature?

Short-term bonds mature in one to three years, while long-term bonds won’t mature for more than a decade. Generally, the interest on municipal bonds is exempt from federal income tax. The interest may also be exempt from state and local taxes if you reside in the state where the bond is issued.

What is the coupon rate of a municipal bond?

The coupon rate is the annual income an investor can expect to receive while holding a particular bond. It is fixed when the bond is issued and is calculated by dividing the sum of the annual coupon payments by the par value. At the time it is purchased, a bond’s yield to maturity and its coupon rate are the same.

What is a typical maturity for municipal bonds?

Municipal bonds are issued in maturities, often falling within the range of one to 30 years. Some state and local governments issue “serial” bonds, which are groups of bonds with a series of maturity dates, typically with maturities occurring each year. Serial bonds typically may mature in one to 20 years.

How many municipal issuers are there?

There are approximately 50,000 issuers of municipal securities, including states, their political subdivisions (such as cities, towns, counties, and school districts), their agencies and instrumentalities (such as housing, health care, airport, port, and economic development authorities and agencies), as well as a …

Does the SEC regulate municipal bonds?

The SEC oversees the MSRB. The MSRB is a self-regulatory organization whose mission is to protect investors, state and local governments and other municipal entities, and the public interest by promoting a fair and efficient municipal securities market.

How is an official statement for a municipal bond prepared?

Use our Municipal Bond Screener to find the right municipal bonds for your portfolio. As mentioned above, the Official Statement is either prepared by the issuer or the underwriter’s counsel, which is determined by whether the issuer sells its debt instruments through a competitive bid or a negotiated sale process.

Which is true about the issuance of municipal securities?

One of the important tasks of the issuance process is preparing an Official Statement – which is prepared by or on behalf of a state or local government in connection with a new issue of municipal securities. This statement is quite comparable to a fund prospectus that is often used in the sale of equities of mutual fund sales.

Who is involved in a negotiated municipal bond sale?

Negotiated Sale of Municipal Debt – In a negotiated sale, the underwriter and its counsel are involved in structuring the transaction and drafting the bond documents. The underwriter also negotiates its fee or discount with the issuer or the conduit borrower, before the pricing of the bonds.

How does a competitive sale of municipal debt work?

Competitive Sale of Municipal Debt – In a competitive bid, the issuer, with the assistance of its financial adviser and bond counsel, structures the financing and prepares the preliminary Official Statement.