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The Handbook of Municipal Bonds

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John Wiley & Sons, Jan 13, 2011 - Business & Economics - 1376 pages
In The Handbook of Municipal Bonds, editors Sylvan Feldstein and Frank Fabozzi provide traders, bankers, and advisors—among other industry participants—with a well-rounded look at the industry of tax-exempt municipal bonds. Chapter by chapter, a diverse group of experienced contributors provide detailed explanations and a variety of relevant examples that illuminate essential elements of this area. With this book as your guide, you’ll quickly become familiar with both buy side and sell side issues as well as important innovations in this field.
  

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Selected pages

Contents

THE STATES
THE COMPLEX STRUCTURE OF AMERICAN LOCAL GOVERNMENT
FROM DILLONS RULE TO HOME RULE
FORMS OF LOCAL GOVERNMENT
METROPOLITAN GOVERNANCE
SUMMARY
OVERVIEW OF PUBLIC FINANCE BANKING
REGIONAL BROKERDEALER FIRMS
SUMMARY
SUMMARY OF NFMA INITIATIVES
A DETAILED LOOK AT THE NFMAS RECOMMENDED BEST PRACTICES
THE MECHANICAL STEPS USED TO DEVELOP AN RBP DOCUMENT
CURRENT ISSUES AND CHALLENGES FACING THE NFMA
ANALYSIS OF DEFAULTS OF MUNICIPAL DEBT IN THE UNITED STATES
LESSONS LEARNED FROM TROUBLED MUNICIPAL FINANCING
SUMMARY OF LESSONS LEARNED

STRATEGIC ADVANTAGES FOR THE REGIONAL FIRM
DISADVANTAGES FACED BY THE REGIONAL FIRM
IMPORTANCE OF A WELLDEFINED PLAN
RECENT CHALLENGES
THE OUTCOME OF REGIONAL BANKING EFFORTS
OVERVIEW OF FINANCIAL ADVISORS AND THEIR ROLES
FINANCIAL ADVISORS IN COMPETITIVE TRANSACTIONS
SECURITIES DEALERS AS FINANCIAL ADVISORS
DETAILS REGARDING THE FINANCIAL ADVISORS FUNCTIONS
HOW TO HIRE A FINANCIAL ADVISOR
SUMMARY
METHOD OF SALE
DEBATE ON THE METHOD OF SALE
HISTORICAL DATA ON USE OF SALE METHOD
SUMMARY
HISTORY OF BOND COUNSEL
REVIEW OF BOND COUNSEL OPINION
FURTHER TAX DEVELOPMENTS
RECENT DEVELOPMENTS
STRUCTURING
SECURITIES LAWS
UNDERWRITING DOCUMENTS
REVIEW OF OTHER BOND DOCUMENTS
SUMMARY
ARBITRAGE61
PRIVATE ACTIVITY BONDS
OTHER MISCELLANEOUS RULES INCLUDING REFUNDINGS
CONCLUSION
THE NATURE OF THE BOND TRUSTEES DUTIES AND RESPONSIBILITIES
THE MUNICIPAL BOND TRUSTEE PRECLOSING
ADMINISTRATION OF THE TRANSACTION BY THE BOND TRUSTEE
SELECTED CHALLENGES AND ISSUES FOR MUNICIPAL TRUSTEES POSTISSUANCE
SUMMARY
HISTORICALLY BANKRUPTCY HAS BEEN A MECHANISM OF DEBT ADJUSTMENT IN OTHER COUNTRIES
BRIEF HISTORY OF MUNICIPAL BANKRUPTCY LEGISLATION IN THE UNITED STATES
EXISTING MUNICIPAL BANKRUPTCY PROVISIONS
INITIATION OF CHAPTER 9 PROCEEDING AND EFFECT ON BONDHOLDER RIGHTS AND REMEDIES
UNIQUE FEATURES OF CHAPTER 9
THE REQUIRED MAINTENANCE OF MUNICIPAL SERVICE DURING A MUNICIPAL BANKRUPTCY
LABOR CONTRACTS ARE AN IMPORTANT ELEMENT OF THE MUNICIPAL BUDGET WHOSE STATUS IN A CHAPTER 9 HAS BEEN SUBJ...
STATUTE GOVERNING THE REJECTION OF COLLECTIVE BARGAINING AGREEMENT IN CORPORATE CONTEXT
PAYMENTS TO BONDHOLDERS ARE NOT PREFERENCES
USE OF LETTERS OF CREDIT AS BACKING FOR MUNICIPAL AND CONDUIT OBLIGATIONS
POSTPETITION DISCLOSURE AND SOLICITATION
CONFIRMATION OF PLAN
CHAPTER 9 CASES FILED AS FEBRUARY 8 2007
THE DEVELOPMENT AND GROWTH OF LOCALLY DENOMINATED CONTRACTUAL SAVINGS POOLS AND CREDIT MARKETS
DECENTRALIZATION ANDOR PRIVATIZATION IS CONTINUING IN VIRTUALLY ALL EMERGING MARKETS
DEVELOPING FINANCIALLY SUSTAINABLE SUBNATIONAL INFRASTRUCTURE CREDITS IN THE EMERGING MARKETS
CONCLUSIONS
MOODYS INVESTORS SERVICE
STANDARD POORS
FITCH RATINGS
SUMMARY
REFUNDING OVERVIEW
ISSUES RELATING TO STRUCTURING A REFUNDING BOND ISSUE
WHEN SHOULD AN ISSUER REFUND PRIOR BONDS?
REFUNDINGS AND DERIVATIVES
COMPETITIVE VERSUS NEGOTIATED SALE
HISTORY
THE PROCESS OF PRIVATIZATION
SUMMARY
THE UNDERWRITERS ROLE IN CONTEXT
WHEN DOES THE UNDERWRITER BECOME INVOLVED IN THE PROCESS?
THE LEADUP TO PRICING
SUMMARY
TRADERS
TYPES OF TRADERS
WATCHING THE TAXABLE MARKETS
WHO BECOMES A TRADER?
A WORD ON ECOMMERCE
RELATIVE VALUEWHAT SHOULD A MUNICIPAL BOND BE WORTH?
HOW MUNICIPAL ARBITRAGE WORKS
WHERE DOES THE MUNICIPAL YIELD CURVES STEEPNESS COME FROM?
CONCLUSION
TENDER OPTION BONDS IN A NUTSHELL
WHAT ARE SWAPS AND HOW DO THEY WORK?
TYPES OF SWAPS AND OTHER HEDGES
USES AND BENEFITS
BUSINESS RISKS
HOW TO ACQUIRE A SWAP
LEGAL ISSUES
TAX ISSUES
DOCUMENTATION AND NEGOTIATION
POSTTRADE MANAGEMENT
GLOSSARY OF KEY TERMS
UNDERSTANDING REGIONAL
TRADING
THE REGIONAL INSTITUTIONAL SALESPERSON AND THEIR CUSTOMERS
THE SKILLS OF THE SALESPERSON
COMMUNICATIONS AND TECHNOLOGY
THE LEGAL OPINION AND INDENTURE OF A MUNICIPAL BOND
PRICING TRANSPARENCY
SELLERS OF MUNICIPAL BONDS
THE FUTURE AS PROLOGUE
THE DEPOSITORY TRUST CLEARING CORPORATION
SUMMARY
THE EVOLUTION OF NEWISSUE TECHNOLOGY
ORDER ENTRY
THE FUTURE
SUMMARY
ORGANIZATION OF THE MSRB AND THE SCOPE OF RULEMAKING AUTHORITY
PROFESSIONAL QUALIFICATIONS SUPERVISION RECORDKEEPING AND COMPLIANCE
UNIFORM PRACTICE RULES
MUNICIPAL MARKET TRANSPARENCY AND THE MSRB
FAIR DEALING AND SUITABILITY
MUNICIPAL SECURITIES INFORMATION LIBRARY
MARKET INTEGRITY
ADDITIONAL INFORMATION REGARDING MSRB
FRAMEWORK OF THE FEDERAL SECURITIES LAWS
APPLICATION TO MUNICIPAL SECURITIES
RULE 15c212
THE ACT
CONCLUSION
GETTING STARTED
DOCUMENT THE PROCESS
REVIEW THE PROCESS
REVISETHE PROCESS DOCUMENTATION
DEFINITION OF A TAXEXEMPT MONEY MARKET FUND
GENERAL REQUIREMENTS OF RULE 2a7
ELIGIBLE SECURITIES FOR TAX EXEMPT FUNDS
APPLICATION OF RULE 2a7 TO MUNICIPAL SECURITIES
POSTACQUISITION CONSTRAINTS IMPOSED BY RULE 2a7
SUMMARY
THE NEED FOR EVALUATIONS
TOOLS OF EVALUATION
ADJUSTING FOR DIFFERENT TYPES OF MUNICIPAL BONDS
OTHER CONSIDERATIONS
THE FUTURE OF MUNICIPAL BOND EVALUATION
UNDERLYING PRINCIPLES
OVERVIEW OF BOND VALUATION
VALUATION MODEL
SPECIFIC ADJUSTMENTS TO THE VALUATION MODEL FOR MUNICIPAL BONDS
TAX ADJUSTMENTS TO THE MODEL
HORIZON PRICE
OTHER VALUES CALCULATED FROM THE MODEL
SUMMARY
BREAKEVEN EQUATION FOR THE ISSUER
RISK ANALYSIS OF LIBORINDEXED FLOATERS
OTHER PERCENT LIBORINDEXED FLOATERS
PERCENT BMAINDEXED FLOATERS
PERCENT CMSINDEXED STRUCTURES
RISKS OF PERCENT CMS AND PERCENT BMS
DESCRIPTION
TAX TREATMENT
ACCOUNTING TREATMENT
TENDER OPTION BONDS
A FOURLEVEL FRAMEWORK FOR PORTFOLIO ASSETS
BASIC HOLDINGLEVEL ANALYSIS
TOTAL RETURN PERFORMANCE
SIMULATIONS
COMPLIANCE AND TARGETS
REPORTING
20 INGREDIENTS FOR SUCCESS
INTUITIVE PATTERNS
DISCOVERY
CAVEATS AND DISCLAIMERS
DESCRIPTION OF A BOND SWAP
OTHER TYPES OF MUNICIPAL BOND SWAPS
SUMMARY
FEDERAL TAX TREATMENT OF MUNICIPAL BONDS
CALCULATING THE EFFECTIVE TAX RATE ON INTEREST INCOME FROM OUTOFSTATE MUNICIPAL BONDS
SUMMARY
THE INVESTOR WHO BUYS THE FUND
TOTAL RATE OF RETURN
MANAGING A FUND BY RELATIVE VALUE
TRADITIONAL BUYERS VERSUS THE ARBITRAGEURS
CONCLUSION
HIGHYIELD BORROWERS
CREDIT ANALYSIS
SECTOR ALLOCATION
STORY BONDS
CREDIT IMPROVEMENT AND ENHANCEMENT
THE USE OF BENCHMARKS
HIGHYIELD MUNICIPAL FUND INFRASTRUCTURE
BUSINESS OF PROPERTY AND CASUALTY INSURANCE COMPANIES
TOTAL RETURN VERSUS BENCHMARK
REGULATORY FACTORS
CREDIT RISK
INTEREST RATE RISK
CONCLUSION
RATIO CURVES
HEDGE FUND ACTIVITY
CONCLUSION
A LIVING BREATHING HUMAN BEING
TRANSPARENCY
UNCOVERING CLIENT OBJECTIVES
ARTICULATING OBJECTIVES AND SETTING PARAMETERS
PERFORMANCE MEASUREMENT
UNCOVERING VALUE IN THE MUNICIPAL BOND MARKET
CONFRONTING INTEREST RATE RISK
CONFRONTING CREDIT RISK
CONFRONTING LIQUIDITY RISK
BOND SWAPPING
A MOST NECESSARY INVESTMENT
SINGLENAME MUNICIPAL CDS CONTRACT
USES OF MUNICIPAL CDS BY PORTFOLIO MANAGERS
SECOND GENERATION OF CREDIT DEFAULT SWAPS
SUMMARY
CDO BASICS
MUNI CDOS
SUMMARY
WHICH APPROACH FOR MUNICIPAL BONDS?
THE BETTER APPROACH FOR MUNICIPAL BOND ATTRIBUTION
MATHEMATICS OF RETURNSBASED ATTRIBUTION
EXAMPLES OF RETURNSBASED ATTRIBUTION FOR MUNICIPAL BONDS
APPLYING MUNICIPAL BOND ATTRIBUTION
THE STRUCTURE FOR OVERSIGHT AND EMERGENCY FINANCING
STRUCTURE OF GOVERNMENTAL FINANCIAL STATEMENTS
INFORMATION PRESENTED IN BASIC FINANCIAL STATEMENTS AND RSI
SUMMARY
ASSESSMENT OF CHALLENGES
SUMMARY
ACTIVIST BOND ANALYSTS APPROACH TO IMPROVING STRESSED OR DETERIORATING CREDITS
WATCHFUL WAITING
ASSET PRESERVATION
PROJECT SALE TO EXTERNAL BUYER
THE DEBT SERVICE RESERVE FUND
CONCLUSION
THE ISSUERS DEBT STRUCTURE AND SECURITY FOR GENERAL OBLIGATION BONDS
THE ISSUERS BUDGETARY OPERATIONS
THE ISSUERS REVENUE STRUCTURE
THE ECONOMY
THE MORE IMPORTANT DEBT RATIOS
CONCLUSION
LIMITS OF THE BASIC SECURITY
FLOWOFFUNDS STRUCTURE
THE ADDITIONAL BONDS TEST
AIRPORT OWNERSHIP STRUCTURES
PASSENGER DEMAND CHARACTERISTICS
COMPETITION
GATE CONTROL
CONCLUSION
ADVANTAGES OF LANDSECURED BONDS
GENERAL CHARACTERISTICS OF LANDSECURED BONDS
CREDIT CRITERIA
ROLE OF THE DEVELOPER
DISCLOSURE
BOND STRUCTURES
NATIONAL LEVEL OVERVIEW
LOCAL LEVEL REVIEW
HOSPITAL LEVEL REVIEW
TRANSACTIONSPECIFIC RISKS
EXAMPLES OF HOSPITAL DOWNGRADES
CONCLUSION
THE APPEAL OF SINGLEFAMILY BONDS
SF BOND ISSUANCE RECORD IN 2006
CREDIT STRENGTH OF SF BONDS
A UNIQUE BASKET OF CALL OPTIONS
PREPAYMENTS IN SF BONDS
MUNICIPAL PREPAYMENT SPEEDS
OTHER WAYS OF HANDLING PREPAYMENTS
PAC BONDS
PASSTHROUGHS
THE TEN YEAR RULE
UNIVERSAL CAP REGULATIONS
OPTIONAL REDEMPTIONS IN SINGLEFAMILY BONDS
CONCLUDING REMARKS
MULTIFAMILY BOND MARKET PARAMETERS
AMT PENALIZES THE SECTOR
MULTIFAMILY SUPPLY OUTLOOK POSITIVE
GREAT DIVERSITY OF ISSUERS
ABUNDANCE OF PROJECT TYPES
DEFAULT RATES
MULTIFAMILY DEFAULT CYCLES
AN ARRAY OF CREDIT ENHANCEMENTS
THE LOW INCOME HOUSING TAX CREDIT
SUPERIOR FHA PROGRAM
GNMABACKED MULTIFAMILY BONDS
PROJECTBASED SECTION 8
FHA SECTION 8MARKTOMARKET
AFFORDABLE HOUSING PROJECTS
TAX OPINION RISKS
PREPAYMENTS IN MULTIFAMILY BONDS
OTHER CALL OPTIONS IN MULTIFAMILY BONDS
CONCLUSION
STRUCTURE OF THE US ELECTRIC INDUSTRY
COST OF ELECTRICITY
CREDIT CONSIDERATIONS
SUMMARY
ACCOMMODATION AND SERVICE OPTIONS
RESIDENCY CONTRACTS
OWNERSHIP GOVERNANCE AND MANAGEMENT
THE ANALYSIS OF ADVANCE FEE DEPOSITS ANDMONTHLY SERVICE FEE PRICES
ASSISTED LIVING UNIT AND NURSING CAREBED DEMAND ANALYSIS
FINANCIAL STATEMENT ANALYSIS
RATIO ANALYSIS
CONTINUING DISCLOSURE
BACKGROUND
ANALYSIS OF STRUCTURAL RISK
ANALYSIS OF CASH FLOW RISK
ANALYSIS OF LITIGATION RISK
CONCLUSION
HISTORY
KEY ANALYTICAL FACTORS
CONCLUSION
STRUCTURE
MANAGEMENT
ECONOMIC BASE
BOND SECURITY
ENVIRONMENTAL ISSUES
OVERVIEW OF COMMERCIAL PAPER
REPAYMENT OF COMMERCIAL PAPER NOTES
ANALYZING COMMERCIAL PAPER WITHOUT ENHANCEMENT
SUMMARY
OVERVIEW OF LOCS
CONSIDERATIONS IN REVIEWING A LOCBACKED SECURITY747
CONCLUSION
TWO MAJOR PURPOSES OF NOTES
SECURITY BEHIND TAX AND REVENUE ANTICIPATION NOTES
SUMMARY
PURE VERSUS MIXED ESCROW FUNDS
TWO TYPES OF REFUNDED BONDS
DETERMINING THE SAFETY OF THE REFUNDED BONDS
SECURITY
RESTRICTIONS ON ISSUANCE ANDREFUNDING OF PCRIDR DEBT
CALL FEATURES
FHA HOSPITAL MORTGAGE INSURANCE
CREDIT RISK
SUMMARY
THE INSTITUTION
USE OF BOND PROCEEDS
SECURITY
DEGREES AND PROGRAMS
MANAGEMENT AND GOVERNANCE
FACULTY AND STAFF
FINANCIAL STATEMENTS
ENDOWMENT FUNDS
PLANT AND FACILITIES
FUNDRAISING ABILITIES
CONCLUSION
MILESTONES IN THE DEVELOPMENT OFHUMAN SERVICE PROVIDERS
RISK FACTORS ASSOCIATEDWITHHUMAN SERVICE PROVIDERS
SUMMARY
WHAT IS MUNICIPAL BOND INSURANCE?
MUNICIPAL BOND INSURANCE BENEFITS
ADDITIONAL BENEFITS OF BOND INSURANCE
MUNICIPAL BOND INSURANCE PROVIDERS
OTHER MUNICIPAL BOND INSURANCE PROVIDERS
REINSURANCE
TELLING THE DIFFERENCE
FINANCIAL FACTORS
OTHER FINANCIAL FACTORS
OTHER BUSINESSES
TAXEXEMPT ISSUERS AND PRIVATIZATION TRENDS
SYSTEMIC SHIFTRISK TRANSFERENCE
GUARANTEED VERSUS PRIVATE LOANS
RECENT INVESTIGATORY AND LEGISLATIVE DEVELOPMENTS
ISSUER CREDIT FACTORS
BOND STRUCTURE AND SECURITY FEATURES
SUMMARY
HOW VRDOS WORK
THE NEED FOR CASH
TYPES OF STATE CREDIT ENHANCEMENT PROGRAMS
ASSESSING STATE CREDIT ENHANCEMENT PROGRAMS
CREDIT ENHANCEMENT PROGRAMADVANTAGES AND DISADVANTAGES
SUMMARY
UNDERSTANDING CHARTER SCHOOLS
THE CHARTER
THE RELATIONSHIP BETWEEN DEMAND AND FINANCIAL SUCCESS
SUMMARY
FILLING A BUDGET GAP
GENERATING MONEY FOR AFFORDABLE HOUSING
SOURCES
OVERVIEW OF THE PROJECT AND THE OWNER
PITFALLS AND RISKS TO INVESTORS
ANALYSIS OF THE REAL ESTATE
CHALLENGES FACED BY MAGNOLIA PARK
RECALCULATION OF THE CAPITALIZATION RATE FOR DISTRESS CREDITS
RECOVERY RATES FOR THE SENIOR SECURED BONDS
BACKGROUND
WHY DOES IT MATTER?
FACTORS COURTS TYPICALLY CONSIDER TO DETERMINE IF A LEASE IS A TRUE LEASE OR A FINANCING ARRANGEMENT
THE BANKRUPTCY COURTS ANALYSIS OF THE DENVER TRANSACTION AS A TRUE LEASE
THE DISTRICT COURTS REVIEW OF THE DENVER SFO JFK AND LAX TRANSACTIONS
THE SEVENTH CIRCUITS REVIEW OF THE SFO JFK LAX AND DEN TRANSACTIONS
CONCLUSION
APPENDIX B
HOW THE SECURITY STRUCTURE WORKS
SOURCES
FIRST SAN DIEGO RIVER IMPROVEMENT PROJECT
COULD WE KEEP THE BONDS CURRENT?
WHAT DO YOU MEAN THE NUMBERS DONT WORK?
CITY OF SAN DIEGOAND SUPER BOWL XXXIITO THE RESCUE
ROSEVILLE TRANSACTION STRUCTURE
BENEFITS TO THE CITY
HOW THE SECURITY STRUCTURE WORKED IN THE FIRST BOND ISSUE
BOND RATINGS
SOURCES
PLAN OF FINANCE
SUBSEQUENT EVENTS
REORGANIZATION FOR THE FUTURE
STRATEGIC PLANNING
FHA SECTION 242 HOSPITAL MORTGAGE INSURANCE
THE CENTRAL ENERGY PLANT
SOURCES
GOOD SWAPS
BAD SWAPS
OVERVIEW
STRENGTHS
STATUS UPDATES
LEARNED IN HINDSIGHT
WEIGHING THE RISKS
SOURCES
SOURCES
SOURCES OF FINANCIAL SUPPORT
OVERCOMING DELAY IN REALIZING REVENUES
THE BOND SALE
THE COLONIAL PERIOD
CIVIL WAR RELATED DEFAULTS
OTHER INTERESTING BONDS
MUNICIPAL BOND COUPONS
Copyright

Other editions - View all

The Handbook of Municipal Bonds
The Handbook of Municipal Bonds
Sylvan G. Feldstein,Frank J. Fabozzi, CFA
Limited preview - 2011

Common terms and phrases

advance refunding agency agreement airport amount analyst arbitrage assessment assets Bankruptcy basis points bond counsel bond issue bond market bondholders callable bond capital cash flow CCRC chapter cost coupon credit enhancement credit quality credit risk CUSIP debt service default disclosure district documents duration entity exempt Exhibit facilities factors federal firms Fitch Ratings fixed rate floaters governmental hedge hedge fund income increase indenture interest rate interest rate swap investment investors issuance lease LIBOR liquidity loans long-term maturity million money market fund Moody’s mortgage MSRB multifamily municipal bond municipal bond insurance municipal issuer municipal market negotiated NRSROs obligations operating option payments portfolio manager prepayments proceeds rate swap ratio refunding bonds revenue bonds rules Section sector structure tax-exempt taxable toll roads trade transaction trustee underwriter variable rate VRDOs yield curve

About the author (2011)

Sylvan G. Feldstein, PhD, is a Director in the Investment Department of the Guardian Life Insurance Company of America, specializing in tax-exempt, taxable, and non-U.S. municipal bonds. Prior to this, he was a research manager and analyst at major Wall Street broker-dealers and a rating agency. A graduate of Columbia University, Feldstein has won the Analyst of the Year Award from the National Federation of Municipal Analysts in addition to authoring or editing four other municipal bond industry books.

Frank J. Fabozzi, PhD, CFA, is Professor in the Practice of Finance at Yale University's School of Management and the Editor of the Journal of Portfolio Management. In 2002, he was inducted into the Fixed Income Analysts Society Hall of Fame and, in 2007, was the recipient of the C. Stewart Sheppard Award given by the CFA Institute.

Bibliographic information

QR code for The Handbook of Municipal Bonds
TitleThe Handbook of Municipal Bonds
Volume 155 of Frank J. Fabozzi Series
AuthorsSylvan G. Feldstein, Frank J. Fabozzi, CFA
PublisherJohn Wiley & Sons, 2011
ISBN1118044940, 9781118044940
Length1376 pages
Subjects › 

Business & Economics / Finance
  
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