Resources

[Key Webinar Takeaways] Municipal disclosure in the time of COVID-19

If you didn’t have the opportunity to join us for the July 8 Bond Buyer webinar, we’re sharing some key takeaways as well as the recording.

While municipal disclosure practices have clearly improved in recent years as a result of ongoing pressure from regulators and bond investors, the improving trend is being threatened by the current pandemic and the resulting healthcare and fiscal crises facing state and local governments.

 

Here’s what our panel of experts had to say:

Ken Hoffman, DPC DATA

  • We have unique workflows that allow us to drill further into the data. We review all disclosure filings to MSRB and tag to obligors and CUSIPs. MSRB monitors COVID-related material event disclosures. We found that although filings may mention “COVID” in their headlines, there are instances where the material event had nothing to do with COVID.
  • According to our analysis, transportation, health care, and general government have been the sectors most affected by COVID, while  Florida, New York, Texas, and Pennsylvania are the states most affected.

Lisa Washburn, Municipal Market Analytics

  • Information and willingness of an issuer to engage with investors is critical. With so much uncertainty, as investors we should be more insistent on getting more regular, comprehensive credit information to support investment decisions. Moreover, we should be more consistent in discriminating among those issuers who voluntarily provide information and those that don’t. The key is to reward good behavior.

Dan Deaton, Nixon Peabody

  • Focus on what’s being stated publicly and use voluntary disclosure as a way to control the narrative.
  • Focus on what you know and don’t know. There’s a lot more knowledge available.
  • Finally, focus on management decisions and most importantly, what management is using to make those decisions. Because chances are investors would love to have access to that if properly couched and framed.

Susannah Page, Roosevelt & Cross

  • As underwriter/broker dealers, our primary responsibility is to the investor. We want to get information from the issuer to the people who are going to buy the bonds.
  • If we’re in the primary market underwriting bonds, we have the responsibility for offering documents and we have something of a “carrot and stick” to work with issuers to get them to disclose.
  • In the secondary market, if we’re recommending, encouraging our various investor clients to buy the bonds of the issuers who are doing a good job of voluntary COVID disclosure – we’re rewarding good behavior. Have investors reinforce and reward good behavior. That’s the best stance and underwriter can have.

Ken Hoffman, DPC DATA – closing thoughts on municipal disclosure now

  • These recommendations will really help us from a vendor perspective in serving our clients with better solutions.
  • In addition, if there were a little more guidance about how and what should be labelled a “COVID-related” event that would help.
  • On the technology front, what we’ve been doing is implementing a COVID-19 flag on reports so market participants can clearly see that there have been events related to the virus. We’re in discussions now about rolling this out. Clients will hopefully be able to take advantage of the contextual connections we’re making.