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Monday, August 10, 2020 | History

2 edition of Competition and borrowing cost in the municipal revenue bond market found in the catalog.

Competition and borrowing cost in the municipal revenue bond market

Michael Mussa

Competition and borrowing cost in the municipal revenue bond market

an appraisal of the evidence

by Michael Mussa

  • 107 Want to read
  • 4 Currently reading

Published by Graduate School of Business of the University of Chicago in [Chicago] .
Written in English

    Places:
  • United States.
    • Subjects:
    • Municipal bonds -- United States.,
    • Municipal revenue -- United States.

    • Edition Notes

      Statementby Michael Mussa.
      Classifications
      LC ClassificationsHG4952 .M87 1979
      The Physical Object
      Pagination83 p. ;
      Number of Pages83
      ID Numbers
      Open LibraryOL1647568M
      LC Control Number91204600

      NBER Program(s):Industrial Organization, Public Economics. We study the interaction between tax advantages for municipal bonds and the market structure of auctions for these bonds. We show this interaction can limit the ability of bidders to extract information rents and is a crucial determinant of state and local governments' borrowing : Daniel Garrett, Andrey Ordin, James W Roberts, Juan Carlos Suárez Serrato, Juan Carlos Suárez Serrat. Credit ratings and bond issuing at the subnational level: training manual (English) Abstract. This book has been prepared as part of the World Bank's Global Program on Capital Markets Development at the Sub-national Level, which provides a framework to assess whether the necessary conditions to issuing bonds have been met and to identify the stages.

      A municipal bond, commonly known as a muni bond, is a bond issued by a local government or territory, or one of their agencies. It is generally used to finance public projects such as roads, schools, airports and seaports, and infrastructure-related repairs. The term municipal bond is commonly used in the United States, which has the largest market of such trade-able securities in the world. The five graphs below are as follows (i) yields for the past ten years, (ii) weekly yields over a twenty-four month period ending May 7, (iii) yields since , (iv) a comparison of the Bond GO Index to year US Treasury Bonds, and (v) the Municipal Market Data index for rating grades "Aa", "A" and "Baa" maturing in the 20th year.

      bonds are usually more liquid investments if they are tax-exempt. The investors most familiar with water and wastewater credits are purchasers of tax-exempt debt. A broader market, greater liquidity and a larger number of actively engaged investors all reduce interest rates and an agency’s tax-exempt borrowing costs even Size: KB.   Cost of borrowing money for the issuer many municipal bonds were sold with year call features where the bond was callable at and declined to par by the 12th year. Introduction to Bond Math.


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Competition and borrowing cost in the municipal revenue bond market by Michael Mussa Download PDF EPUB FB2

Competition and borrowing cost in the municipal revenue bond market: An appraisal of the evidence [Michael Mussa] on *FREE* shipping on qualifying : Michael Mussa. Municipal bonds are one place where the competition level is low, and additional knowledge can pay off.

This is particularly true in an era where municipal bond insurance is less prevalent, and as. In mid-March, the “municipal market was imploding in real time” as bond holders worried about state and local finances engaged in a wave of panic selling.

Sellers dumped over $12 billion in Author: Richard Mcgahey. Michael Joehnk and David Kidwell,The Journal of Finance, Vol.

34, "Comparative Costs of Competitive and Negotiated Underwritings in the State and Local Bond Market" (Study of paired data consisting of pairs of general obligation bonds and pairs of revenue bonds found that competitive sales reduce costs by 23 to 27 basis points compared to negotiated sales.).

Robert J. RogowskiUnderwriting competition and issuer borrowing costs in the municipal revenue bond market Journal of Bank Research, 10 (4) (), pp. Google ScholarCited by:   Revenue Anticipation Note - RAN: A municipal bond that is repaid with expected revenues from the project being financed by the bond.

RANs have a. These municipal bonds are backed by specific, narrow taxing power. For example, a town might pass a bond to build a bridge and agree to a 1¢ increase in sales tax for every $ generated within the city limits for five years to pay for the debt.

Many municipal bonds carry provisions that allow the issuer to call or redeem the bond prior to the actual maturity date.

An issuer will typically call bonds when prevailing interest rates drop, allowing the entity to re-issue bonds at a lower borrowing cost.

In this circumstance, the action makes reinvestment less desirable for the holder. On Decem Valley issued year, 12 per cent bonds with a $, face value, for $, The bonds are dated Decem call for semiannual interest payments on June 30 and Decem and mature in 10 years on December Valley made the required interest and principal payments when due.

The customer will receive a semiannual interest payment of $ The bond pays 7% interest based on the $1, par value. There are 10 bonds in this example that have a par value of $10, Seven percent of $10, is $ Since interest is paid semiannually, the payment would equal $ A REVIEW OF THE MUNICIPAL BOND MARKET Richard H.

Rosenbloom effects on the borrowing costs of state and local governments. The discussion focuses on the pri- mary (new issue) market for municipal bonds use of revenue bonds as opposed to general obli- gation bonds. In revenue bonds accounted. Pricing Bonds in a Negotiated Sale One of the most important outcomes of the sale of bonds, the cost of borrowing, is established through the pricing process.

Unlike a competitive sale, bond pricing in a negotiated sale requires a much greater degree of issuer involvement. Political Competition and Rule-Based Financing in the Municipal Bond Market Marian Moszoro Cities, counties, and states issue municipal bonds to raise money for public projects, including new construction for education, utilities, and transportation.1 Securing funding for these projects could benefit politicians who are up for reelection.

Among its most remarkable moves was its backstop of the $ trillion municipal bond (“muni”) market, a critical source of financing for states, counties, and municipalities. The Fed hopes this will keep credit flowing to states and localities as their revenues—and the market for their debt—reel in the wake of the global coronavirus pandemic.

The EMMA website is funded and operated by the Municipal Securities Rulemaking Board (MSRB), the self-regulatory organization charged by Congress with promoting a fair and efficient municipal securities market. EMMA is designated by the U. Securities and Exchange Commission as the official source for municipal securities data and disclosure.

Government’s borrowing requirement and other obligations In brief • Government’s gross borrowing requirement is expected to be R billion in /17, increasing to R billion in / • Debt-service costs are estimated to be R billion in /17, or per cent ofFile Size: KB.

Bonds market data, news, and the latest trading info on US treasuries and government bond markets from around the world. Secondary Trading Costs in the Municipal Bond Market Preview Article in The Journal of Finance 61(3) February with Reads How we measure 'reads'.

Additionally, does the RFP require the underwriter to provide information on the cost of borrowing for the duration of the bonds, not just the cost of issuance, as well as having the underwriter provide at sale pricing comparables and a post-pricing book showing market conditions at the time of the sale and otherFile Size: KB.

Local councils turn to the bond markets to pay for infrastructure projects Local authorities are considering revamping the municipal bond market to finance the road, light rail and school projects. How interest rates affect municipal bond prices.

Interest rates affect municipal bond prices in the same way that they affect other bonds. That is that rising interest rates work in favor of the bond issuer and declining interest rates work in favor of the bondholder.

A Tax Anticipation Note (TAN) is a type of municipal bond issued to finance a current operation or project before the issuer receives tax revenues.

In effect, the issuing government uses the.The net borrowing cost to a municipal issuer of a Direct Pay Build America Bond (BAB) with a 7% interest rate is: The Treasury will reimburse 35% of the interest payment, which results in a net borrowing cost of % (% x [% - 35%]).