Primary Financing for Municipal Securities
Chapters in this video
- 0:00 How new municipal bonds reach investors
- 1:25 Competitive sale: the notice of sale and sealed bids
- 2:58 NIC vs. TIC: which cost measure is more accurate
- 4:23 Negotiated sale: issuer selection and pre-marketing
- 5:35 MSRB pay-to-play rule and the two-year ban
- 6:22 Private placement: bypassing the public offering
- 6:54 Rapid-fire exam recap
What this video covers
- How a competitive sale works: the notice of sale, sealed bids, and why the lowest interest cost wins the deal
- Why net interest cost (NIC) is a simple weighted average and why true interest cost (TIC) is the more accurate measure because it accounts for the time value of money
- How a negotiated sale differs: issuer selects the underwriter directly, pre-marketing is allowed, and why this method pairs with revenue bonds
- The default exam pairing: general obligation (GO) bonds with competitive sales, revenue bonds with negotiated sales
- The MSRB pay-to-play rule: a two-year ban on negotiated underwriting business after a political contribution to an issuer official, and why this does not apply to competitive bids
- What a private placement is and the liquidity trade-off for institutional investors
- Which administrative duties apply to both sale types: CUSIP application, depository eligibility, and new-issue information dissemination
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