Primary Financing for Municipal Securities

What this video covers

• How a competitive sale works, from the notice of sale through sealed bids to the lowest-cost winner, and why general obligation (GO) bonds default to this method
• The formula trap behind net interest cost (NIC) versus true interest cost (TIC), and why TIC is the more accurate measure because it accounts for the time value of money
• How a negotiated sale differs, why revenue bonds default to this method, and the advantage of pre-marketing to gauge investor demand
• The Municipal Securities Rulemaking Board (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, who buys these bonds, and the liquidity trade-off for investors
• Administrative requirements that apply to both sale methods: CUSIP application, depository eligibility, and new-issue dissemination
• Why the notice of sale appears only in competitive sales, and how the exam uses this as a classification trap