Sep 2, 2008
Delinquency in ongoing annual disclosures found to be systemic problem in market
Fort Lee NJ (USA) – September 2, 2008 –DPC DATA, leading provider of municipal bond disclosure data, today issued groundbreaking research into ongoing disclosure performance by issuers and obligors of municipal bonds. The study uncovers a significant lack of transparency due to failures to file annual disclosures, as well as an accelerating trend of disclosure delinquency.
The research is based on a comprehensive analysis of the first ten full years of disclosure performance following the complete phase-in of the SEC’s 1994 amendments to Rule 15c2-12, which established the municipal market’s current disclosure regime. DPC DATA operates one of the four SEC-designated Nationally Recognized Municipal Securities Information Repositories (NRMSIR) established under that Rule to act as market clearinghouses for disclosure materials for investors and other market participants.
DPC DATA studied the disclosure practices of more than 35,000 bond issues that came to market from 1996 to 2005, that were subject to secondary market disclosure requirements. The study analyzed disclosure performance as recorded by the DPC DATA NRMSIR across all issue size categories, all bond market sectors, and all geographic regions of the country.
Highlights from the research findings include the following:
Approximately half of the bond issues studied failed to file annual disclosure documents for one or more years.
Approximately one-fourth have been chronically delinquent, failing to file disclosures for three or more years.
The number and proportion of failures to file are increasing every year.
As of 2006, the last reporting year tracked by the study, bonds in disclosure delinquency represented more than $348 billion in original par amount.
The level of disclosure delinquencies is significant among issues of all sizes.
The most significant concentration of delinquencies is found among bond sectors that are typically regarded as having higher credit risk.
“Broad market disregard for continuing disclosure obligations suggests a crisis in credit transparency, which is only magnified by the current situation the market faces in the wake of recent bond insurance and rating agency events,” said Peter Schmitt, CEO of DPC DATA. “Continuing disclosure delinquency appears to be an ingrained habit of a large and growing number of municipal issuers and obligors. This is not good news for anyone in the market, but particularly for investors, who are the single class of market participant the SEC intended to protect with the 1994 amendments to Rule 15c2-12.”
The research report, entitled “Estimating Municipal Securities Continuing Disclosure Compliance: A Litmus Test Approach,” may be obtained without cost at
www.DPCDATA.com.
About DPC DATA
DPC DATA Inc., founded in 1992, provides securities-related data products and services to more than 600 financial institutions and information intermediaries. DPC DATA is a strategic partner of Standard & Poor's. In addition to marketing its own portfolio of trademarked financial data products, DPC DATA offers outsourced and offshore services in custom data management and software development. DPC DATA is a privately held firm, headquartered in Fort Lee, NJ. For more information please visit
www.DPCDATA.com.
