In
The Handbook of Municipal Bonds, editors Sylvan Feldstein and Frank Fabozzi provide traders, bankers, and advisors—among other industry participants—with a well-rounded look at the industry of tax-exempt municipal bonds. Chapter by chapter, a diverse group of experienced contributors provide detailed explanations and a variety of relevant examples that illuminate essential elements of this area. With this book as your guide, you’ll quickly become familiar with both buy side and sell side issues as well as important innovations in this field.
Table des matières
Foreword xxxi
Christoper “Kit” Taylor
Preface xxxiii
About the Editors xxxix
Contributing Authors xli
PART ONE The Sell Side: The Originators of Deals 1
CHAPTER 1 The Central Place of States and Local Governments in American Federalism 3
Richard Briffault
The States 7
The Complex Structure of American Local Government 12
From Dillon’s Rule to Home Rule 17
Forms of Local Government 19
Metropolitan Governance 21
Summary 23
CHAPTER 2 An Overview of Investment Banking 25
Herman R. Charbonneau
Overview of Public Finance Banking 25
Regional Broker-Dealer Firms 29
Strategic Advantages for the Regional Firm 31
Disadvantages Faced by the Regional Firm 34
Importance of a Well-Defined Plan 35
Recent Challenges 39
The Outcome of Regional Banking Efforts 41
CHAPTER 3 Role of the Financial Advisor 43
William H. Wood
Overview of Financial Advisors and Their Roles 43
Financial Advisors in Negotiated Transactions 44
Financial Advisors in Competitive Transactions 45
Securities Dealers as Financial Advisors 45
Independent Financial Advisors 46
Pricing of Financial Advisory Services 46
Details Regarding the Financial Advisor’s Functions 47
Typical Advisory Services Provided In Connection with an Interest Rate Swap 48
How to Hire a Financial Advisor 49
Summary 50
CHAPTER 4 Method of Sale in the Municipal Bond Market 51
Jun Peng, Kenneth A. Kriz, and Tracy Neish
Method of Sale 52
Debate on the Method of Sale 57
Historical Data on Use of Sale Method 62
Summary 66
CHAPTER 5 The Role of Bond Counsel in Public Agency Financing 69
John L. Kraft
History of Bond Counsel 69
Review of Bond Counsel Opinion 70
Further Tax Developments 75
Disclosure and Securities Laws 75
Recent Developments 76
CHAPTER 6 The Role of Counsel to the Underwriters 79
Mary G. Wilson
Structuring 80
Securities Laws 80
Underwriting Documents 85
Review of Other Bond Documents 87
Blue Sky 88
Opinion 88
Summary 89
CHAPTER 7 Summary of Federal Tax Requirements for Tax-Exempt Bonds 91
Perry E. Israel
Arbitrage 93
Private Activity Bonds 108
Other Miscellaneous Rules, Including Refundings 120
Conclusion 125
CHAPTER 8 The Role of the Municipal Bond Trustee 127
James E. Spiotto
The Nature of the Bond Trustee’s Duties and Responsibilities 127
The Municipal Bond Trustee Preclosing 132
Administration of the Transaction by the Bond Trustee 135
Selected Challenges and Issues for
Municipal Trustees Postissuance 137
Summary 144
Chapter 9: The Last Resort for Financially Distressed Municipalities 145
James E. Spiotto
Historically, Bankruptcy Has Been a Mechanism of Debt Adjustment in Other Countries 149
Brief History of Municipal Bankruptcy Legislation in the United States 150
Existing Municipal Bankruptcy Provisions 153
Initiation of Chapter 9 Proceeding and Effect on Bondholder Rights and Remedies 156
Unique Features of Chapter 9 161
The Required Maintenance of Municipal Service during a Municipal Bankruptcy 163
Labor Contracts Are an Important Element of the Municipal Budget Whose Status in Chapter 9 Has Been a Subject of Discussion 164
Statute Governing the Rejection of Collective Bargaining Agreement in Corporate Context 165
“Special Revenues” Pledged to Bondholders 166
Payments to Bondholders Are not Preferences 168
Use of Letters of Credit as Backing for Municipal and Conduit Obligations 169
Plan of Adjustment for Municipality Time, Content, Impairment of Claims and Acceptance 170
Postpetition Disclosure and Solicitation 174
Acceptance of the Plan 175
Confirmation of Plan 176
Appendix: Chapter 9 Cases Filed as of February 8, 2007 180
CHAPTER 10 Subnational Infrastructure Finance in the Emerging Markets: A Financial Guaranty Perspective 191
Thomas H. Cochran, Anthony Pellegrini, David Stevens, Richard Torkelson, and David White
The Development and Growth of Locally Denominated Contractual Savings Pools and Credit Markets 192
The Devolution Revolution: Decentralization and/or Privatization Is Continuing in Virtually All Emerging Markets 195
Developing Financially Sustainable Subnational
Infrastructure Credits in the Emerging Markets 198
Conclusions 222
CHAPTER 11 The Role of the Rating Agencies 223
Edward A. Rabson
Moody’s Investors Service 224
Standard & Poor’s 227
Fitch Ratings 231
Summary 233
CHAPTER 12 Municipal Bond Refundings 235
William H. Wood
Refunding Overview 235
Reasons to Sell Refunding Bonds 236
Issues Relating to Structuring a Refunding Bond Issue 238
When Should an Issuer Refund Prior Bonds? 242
Refundings and Derivatives 244
Competitive versus Negotiated Sale 246
Conclusions 246
CHAPTER 13 Public-Private Partnerships 247
Robert H. Muller
History 248
The Process of Privatization 252
Summary 261
PART TWO The Sell Side: Distribution and Market-Making Roles 263
CHAPTER 14 The Role of the Underwriter 265
Christopher J. Mier
The Underwriter’s Role in Context 265
When Does the Underwriter Become Involved in the Process? 266
The Lead-Up to Pricing 268
Summary 271
CHAPTER 15 The Roles of Traders and Brokers 273
Jon Paul Zaptin
Traders 273
Types of Traders 277
Watching the Taxable Markets 278
Trading Discipline and Mental Attitudes 278
Who Becomes a Trader? 279
Brokers 280
A Word on E-Commerce 281
Summary 281
CHAPTER 16 Municipal Arbitrage and Tender Option Bonds 283
Bart Mosley
Relative Value—What “Should” a Municipal Bond Be Worth? 284
How Municipal Arbitrage Works 286
Where Does the Municipal Yield Curve’s Steepness Come from? 292
Conclusion 294
Appendix: Tender Option Bonds in a Nutshell 296
CHAPTER 17 Interest Rate Swaps and Their Application to Tax-Exempt Financing 299
Eric H. Chu, Craig Underwood, Thomas B. Fox, Jon A. Mc Mahon, Roger L. Davis, Stephen A. Spitz, Albert Simons III, and George G. Wolf
What Are Swaps and How Do They Work? 300
Types of Swaps and Other Hedges 305
Uses and Benefits 311
Business Risks 315
How to Acquire a Swap 317
Legal Issues 323
Tax Issues 326
Documentation and Negotiation 333
After the Close: Posttrade Management 337
Appendix: Glossary of Key Terms 340
CHAPTER 18 The Regional Firm: Its Customers, Traders, and Institutional Salespeople 345
Mychele Lindvall
Understanding “Regional” 345
Trading 347
The Regional Institutional Salesperson and Their Customers 351
The Skills of the Salesperson 353
CHAPTER 19 Changing Roles of Buyers and Sellers of Municipal Bonds: One Participant’s View 355
William J. Darusmont
Communications and Technology 357
The Legal Opinion and Indenture of a Municipal Bond 357
The Role of Credit Agencies 358
Changes in Tax-Exempt Status 358
Pricing Transparency 359
The Buyers of Municipals 359
Sellers of Municipal Bonds 360
The Future as Prologue 362
CHAPTER 20 The Depository Trust Company and Real-Time Price Transparency 365
Sylvan G. Feldstein and David Ratner
The Depository Trust & Clearing Corporation 365
Summary 370
CHAPTER 21 i-Deal/Ipreo: The Transaction Platform 373
Allen Williams
The Evolution of New-Issue Technology 373
Order Entry 374
The Issuer and Prospectus Delivery 375
The Future 375
Summary 379
PART THREE Compliance Issues 381
CHAPTER 22 The Municipal Securities Rulemaking Board 383
Paul S. Maco and Jennifer Webster Taffe
Organization of the MSRB and the Scope of Rulemaking Authority 385
Professional Qualifications, Supervision, Recordkeeping and Compliance 386
Uniform Practice Rules 388
Municipal Market Transparency and the MSRB 390
Fair Dealing and Suitability 391
Municipal Securities Information Library 393
Market Integrity 394
Additional Information Regarding MSRB 396
CHAPTER 23 The Role of the Securities and Exchange Commission 397
Paul S. Maco and Cristy C. Edwards
Framework of the Federal Securities Laws 399
Application to Municipal Securities 407
Rule 15(c)2-12 420
CHAPTER 24 Sarbanes-Oxley and the Securities and Exchange Commission 425
Paul S. Maco
The Act 426
Conclusion 446
CHAPTER 25 Using Auditing Techniques to Develop Investment Adviser Compliance Procedures 447
Kevin Reilly
Getting Started 448
Understanding the Process 448
Document the Process 453
Review the Process 454
Revise the Process Documentation 456
Summary 456
CHAPTER 26 Rule 2a-7: Legal and Research Issues for Tax-Exempt Money Market Funds 459
Stephen A. Keen and Leslie K. Ross
Definition of a Tax-Exempt Money Market Fund 460
General Requirements of Rule 2a-7 462
Eligible Securities for Tax Exempt Funds 469
Diversifi cation of Tax Exempt Funds Under Rule 2a-7 477
Application of Rule 2a-7 to Municipal Securities 482
Postacquisition Constraints Imposed by Rule 2a-7 496
Summary 498
PART FOUR Fixed Income Analysis of Municipal Products 501
CHAPTER 27 Evaluation of Municipal Bonds 503
Gerard Brennan
The Need for Evaluations 503
Tools of Evaluation 504
Adjusting for Different Types of Municipal Bonds 507
Other Considerations 507
The Future of Municipal Bond Evaluation 511
CHAPTER 28 Valuation of Municipal Bonds with Embedded Options 513
Frank J. Fabozzi, Andrew Kalotay, and Michael P. Dorigan
Underlying Principles 514
Overview of Bond Valuation 514
Valuation Model 516
Specific Adjustments to the Valuation Model for Municipal Bonds 527
Tax Adjustments to the Model 528
Horizon Price 532
Other Values Calculated from the Model 533
Relative Value Analysis of Municipal Bonds 534
Summary 535
CHAPTER 29 Analyzing and Evaluating Tax-Exempt Indexed Floaters: Investor and Issuer Perspectives 537
Yingchen Li
Breakeven Equation for the Issuer 537
Risk Analysis of LIBOR-Indexed Floaters 538
Other Percent LIBOR-Indexed Floaters 539
Percent BMA-Indexed Floaters 540
CMS and BMS 541
Percent CMS-Indexed Structures 541
Risks of Percent CMS and Percent BMS 542
Summary 543
CHAPTER 30 Municipal Inverse Floating Rate Securities 545
Cadmus Hicks
Description 545
Tax Treatment 546
Computations 547
Accounting Treatment 550
Tender Option Bonds 551
Summary 551
CHAPTER 31 Analyzing Portfolios Daily 553
Paul R. Daniels
A Four-Level Framework for Portfolio Assets 554
Credit-Level Analysis 555
Basic Holding-Level Analysis 557
Total Return Performance 562
Simulations 564
Portfolio Structure: Compliance and Targets 566
Reporting 567
A Secret Formula? 567
Summary: 20 Ingredients for Success 568
CHAPTER 32 Discovering Relative Value Using Custom Indices 571
Daniel J. Garrett
Intuitive Patterns 571
Empirical Patterns 572
Discovery 572
Caveats and Disclaimers 575
Conclusion 575
CHAPTER 33 Municipal Bond Swaps 577
Evan C. Rourke
Description of a Bond Swap 577
Tax Swapping 577
Other Types of Municipal Bond Swaps 579
Summary 580
CHAPTER 34 The Tax Treatment of Municipal Bonds 581
Martin J. Mauro and Philip Fischer
Federal Tax Treatment of Municipal Bonds 581
Calculating the Effective Tax Rate on Interest Income from Out-of-State Municipal Bonds 585
Summary 588
PART FIVE The Buy Side: Institutional Investors 589
CHAPTER 35 Managing a National Municipal Bond Fund 591
Alexander Grant
The Investor Who Buys the Fund 592
National versus State-Specifi c Funds 593
Total Rate of Return 594
Managing a Fund by Relative Value 595
Issues of Coupon and Structure 596
Traditional Buyers versus the Arbitrageurs 597
Conclusion 598
CHAPTER 36 Managing a High-Yield Municipal Fund 599
Wayne Godlin, Jim Phillips, Bill Black, Barnet Sherman, Mark Paris, and Seth Horwitz
High-Yield Borrowers 600
High-Yield Municipal Bond Fund Track Record 601
Credit Analysis 603
Sector Allocation 603
Trading Opportunities 604
Story Bonds 606
Opportunity Bonds 607
Credit Improvement and Enhancement 607
Derivatives 608
The Use of Benchmarks 610
High-Yield Municipal Fund Infrastructure 610
Summary 611
CHAPTER 37 Managing Municipal Bonds for Property and Casualty Insurance Companies for Total Return 613
Karen Szerszen
Business of Property and Casualty Insurance Companies 613
Combined Ratio 614
Total Return versus Benchmark 616
Regulatory Factors 616
Tax Risk 618
Credit Risk 619
Interest Rate Risk 622
Conclusion 623
CHAPTER 38 The Role of Hedge Funds in the Municipal Market 625
Jonathan A. Fiebach
Ratio Curves 626
Hedge Fund Activity 628
Conclusion 631
CHAPTER 39 Managing Municipal Bond Portfolios for High-Net-Worth Investors 633
Thomas P. Dalpiaz
A Living, Breathing Human Being 633
Emotional Ups and Downs 634
Transparency 634
Education 634
The Starting Point 634
The Client’s Existing Situation 635
Uncovering Client Objectives 636
What Is the Client Really Trying to Achieve in the Bond Market? 636
Articulating Objectives and Setting Parameters 637
Performance Measurement 638
Uncovering Value in the Municipal Bond Market 640
Confronting Interest Rate Risk 640
Confronting Credit Risk 642
Confronting Call Risk 642
Confronting Liquidity Risk 643
Yield Curve Analysis 644
Bond Swapping 644
Using Balance in Portfolio Construction and Reconstruction 645
Portfolio Distributions 646
Municipal Bonds: A Most Necessary Investment 646
CHAPTER 40 Municipal Credit Default Swaps 647
Frank J. Fabozzi
Single-Name Municipal CDS Contract 648
Uses of Municipal CDS by Portfolio Managers 652
Second Generation of Credit Default Swaps 654
Summary 655
CHAPTER 41 Municipal Collateralized Debt Obligations 657
Rebecca Manning, Douglas J. Lucas, Laurie S. Goodman, and Frank J. Fabozzi
CDO Basics 658
Muni CDOs 662
Summary 663
CHAPTER 42 Performance Attribution of Municipal Bonds 665
Daniel J. Garrett
Which Approach for Municipal Bonds? 666
What Doesn’t Work for Municipal Bond Attribution 667
The Better Approach for Municipal Bond Attribution 670
Mathematics of Returns-Based Attribution 672
Examples of Returns-Based Attribution for Municipal Bonds 677
Client Stories: Applying Municipal Bond Attribution 684
Summary 686
PART SIX Credit Analysis 689
CHAPTER 43 The Role of the National Federation of Municipal Analysts in Promoting Better Disclosure 691
Lisa Good, Gerry Lian, Tom Weyl, Gregory A. Clark, and Gregory Aikman
Summary of NFMA Initiatives 692
The Special Importance of Disclosure 693
A Detailed Look at the NFMA’s Recommended Best Practices 697
Procedure for Developing RBP Documents 698
The Mechanical Steps Used to Develop an RBP Document 701
Current Issues and Challenges Facing the NFMA 702
CHAPTER 44 A History of Modern Municipal Defaults 707
James E. Spiotto
Analysis of Defaults of Municipal Debt in the United States 707
Lessons Learned from Troubled Municipal Financing 719
Summary of Lessons Learned 726
Rules for Survival 727
Appendix: The Structure for Oversight and Emergency Financing 728
CHAPTER 45 New Issues in Municipal Accounting 733
David R. Bean and Dean Michael Mead
Structure of Governmental Financial Statements 734
Information Presented in Basic Financial Statements and RSI 735
Summary 764
CHAPTER 46 Managing a Buy-Side Municipal Bond Research Department 767
Richard A. Ciccarone
Assessment of Challenges 768
Summary 777
CHAPTER 47 The Role of an Activist Bond Analyst 779
Arthur E. Schloss
Activist Bond Analyst’s Approach to Improving Stressed or Deteriorating Credits 779
Watchful Waiting 782
Asset Preservation 783
The Conference Call 783
Covenant Waivers/Consultants 784
Project Sale to External Buyer 785
The Debt Service Reserve Fund 786
Deleveraging 786
Conclusion 788
CHAPTER 48 How to Analyze General Obligation Bonds 789
Sylvan G. Feldstein and Terry J. Goode
The Issuer’s Debt Structure and Security for General Obligation Bonds 790
The Issuer’s Budgetary Operations 796
The Issuer’s Revenue Structure 801
The Economy 802
The More Important Debt Ratios 806
Conclusion 807
CHAPTER 49 General Analytical Framework for Assessing the Credit Worthiness of Revenue Bonds 809
Sylvan G. Feldstein
Limits of the Basic Security 810
Flow-of-Funds Structure 810
Rate, User Charge or Dedicated Revenue and Tax Covenants 811
The Priority of Pledged Revenue Claims 811
The Additional Bonds Test 811
Other Relevant Covenants and Issues 812
CHAPTER 50 How to Analyze Airport Revenue Bonds 813
William E. Oliver and Daryl Clements
Airport Ownership Structures 813
Passenger Demand Characteristics 814
Competition 816
Use and Lease Agreements 816
Gate Control 817
Airport Management 818
Conclusion 818
CHAPTER 51 Land-Secured Bonds 821
Ronald L. Mintz
Advantages of Land-Secured Bonds 821
General Characteristics of Land-Secured Bonds 822
Credit Criteria 824
Role of the Developer 832
Disclosure 835
The Land-Secured Bond Market 835
Bond Structures 842
Conclusion 843
CHAPTER 52 Hospital Bond Analysis 845
Lynn Cavallaro
National Level Overview 846
Local Level Review 850
Hospital Level Review 851
Transaction-Specifi c Risks 856
Examples of Hospital Downgrades 857
Conclusion 858
CHAPTER 53 Single-Family Housing Bonds 861
Kurt van Kuller
The Appeal of Single-Family Bonds 861
SF Bond Issuance Record in 2006 864
Credit Strength of SF Bonds 867
A Unique Basket of Call Options 871
Prepayments in SF Bonds 872
Municipal Prepayment Speeds 874
Other Ways of Handling Prepayments 879
PAC Bonds 879
Discriminating between PAC Bonds 880
Passthroughs 881
Lockout Bonds 881
Crosscalling 882
The Ten Year Rule 884
Universal Cap Regulations 886
The Unused Proceeds Call 886
Optional Redemptions in Single-Family Bonds 888
Pricing Single-Family Bonds 889
Concluding Remarks 891
CHAPTER 54 Multifamily Bonds 893
Kurt van Kuller
Multifamily Bond Market Parameters 893
AMT Penalizes the Sector 895
Multifamily Supply Outlook Positive 897
Volume Cap Constrains Bond Issuance 897
Great Diversity of Issuers 897
Abundance of Project Types 899
Multifamily Bonds: Default Rates 901
Multifamily Default Cycles 902
An Array of Credit Enhancements 904
The Low Income Housing Tax Credit 905
FHA Insurance 905
Risk Sharing: Superior FHA Program 908
GNMA Backed Multifamily Bonds 909
Project-Based Section 8 911
FHA Section 8 Mark-to-Market 913
Section 236 Interest Subsidy 914
“Affordable Housing” Projects 915
Tax Opinion Risks 916
Multifamily Bond Redemptions 916
Prepayments in Multifamily Bonds 918
Other Call Options in Multifamily Bonds 920
Conclusion 921
CHAPTER 55 Tax-Exempt Electric Utility Debt 923
Gary M. Krellenstein and Paul R. Bockwoldt
Structure of the U.S. Electric Industry 925
Cost of Electricity 933
Charges for Service 934
Credit Considerations 935
Summary 939
CHAPTER 56 How to Analyze Startup Continuing Care Retirement Community Bonds 941
Edward C. Merrigan
Accommodation and Service Options 941
Residency Contracts 943
Ownership, Governance, and Management 946
Demand Analysis of Independent Living Units 947
The Analysis of Advance Fee Deposits and Monthly Service Fee Prices 950
Assisted Living Unit and Nursing Care Bed Demand Analysis 950
Utilization and Fill-Up Expectations 951
Financial Statement Analysis 951
Ratio Analysis 952
Legal Security Features and Covenant Considerations 953
Continuing Disclosure 954
Summary 955
CHAPTER 57 How to Analyze Tobacco Bonds 957
Gerry Lian
Background 957
Analysis of Structural Risk 964
Analysis of Corporate Credit Risk 965
Analysis of Cash Flow Risk 968
Analysis of Litigation Risk 971
Conclusion 978
CHAPTER 58 Toll Road Analysis 981
Robert H. Muller
History 981
Key Analytical Factors 984
Conclusion 993
CHAPTER 59 Water and Sewer Bond Analysis 995
Brian Winters
Structure 996
Management 997
Economic Base 997
Financial Ratios 998
Bond Security 1000
Environmental Issues 1002
Other Considerations 1002
Conclusion 1002
PART SEVEN Special Security Structures and Their Analysis 1005
CHAPTER 60 Evaluating Tax-Exempt Commercial Paper 1007
Maria C. Sazon
Overview of Commercial Paper 1007
Repayment of Commercial Paper Notes 1008
Analyzing Various Sources of Repayment for Commercial Paper 1009
Analyzing Commercial Paper without Enhancement 1011
Summary 1012
CHAPTER 61 The Use of Letters-of-Credit in Connection with Municipal Securities 1015
Todd P. Zerega
Overview of LOCs 1016
Considerations in Reviewing a LOC-Backed Security 1019
Conclusion 1023
CHAPTER 62 How to Analyze Tax, Bond, and Grant Anticipation Notes 1025
Sylvan G. Feldstein and Frank J. Fabozzi
Two Major Purposes of Notes 1025
Security Behind Tax and Revenue Anticipation Notes 1026
Information Needed Before Buying Tax or Revenue Anticipation Notes 1027
Summary 1029
CHAPTER 63 How to Analyze Refunded Municipal Bonds 1035
Sylvan G. Feldstein
Pure versus Mixed Escrow Funds 1035
What are the Reasons for Refundings? 1036
Two Types of Refunded Bonds 1037
Determining the Safety of the Refunded Bonds 1038
CHAPTER 64 Pollution Control Revenue, Industrial Development Revenue, and Conduit Financing Bonds 1041
Gary Krellenstein
Security 1042
Restrictions on Issuance and Refunding of PCR/IDR Debt 1044
Call Features 1047
Summary 1048
CHAPTER 65 How to Analyze FHA-Insured Mortgage Hospital Bonds 1049
Sylvan G. Feldstein
FHA Hospital Mortgage Insurance 1050
Credit Risk 1051
The “Prudent Man” Evaluation Approach 1053
Summary 1054
CHAPTER 66 How to Analyze Higher Education Bonds 1055
Bradley D. Mincke
The Institution 1056
Use of Bond Proceeds 1057
Security 1058
Degrees and Programs 1060
Student Demand 1060
Management and Governance 1064
Faculty and Staff 1065
Tuition and Financial Aid 1066
Financial Statements 1067
Endowment Funds 1072
Plant and Facilities 1073
Fundraising Abilities 1074
Definitions of Certain Terms 1074
Continuing Disclosure 1074
Conclusion 1075
CHAPTER 67 Analyzing Human Service Provider Bonds 1077
Ruben Selles
Milestones in the Development of Human Service Providers 1078
Risk Factors Associated with Human Service Providers 1081
Summary 1083
CHAPTER 68 How to Analyze the Municipal Bond Insurers and the Bonds They Insure 1085
Donald King Cirillo
What Is Municipal Bond Insurance? 1085
Municipal Bond Insurance Benefi ts 1087
Additional Benefi ts of Bond Insurance 1089
Types of Municipal Bond Insurance 1090
Municipal Bond Insurance Providers 1091
Other Municipal Bond Insurance Providers 1092
Reinsurance 1093
Telling the Difference 1094
Financial Factors 1096
Other Financial Factors 1097
Other Businesses 1098
Conclusion 1099
CHAPTER 69 Student Loan Financing: Risk Evaluation Tax-Exempt and Taxable Markets Converge 1101
Diane R. Maurice and Ankur Goyal
Tax-Exempt Issuers and Privatization Trends 1103
Systemic Shift-Risk Transference 1107
Guaranteed versus Private Loans 1108
Risk Profi le Evolves 1109
Summary 1109
Appendix: Recent Investigatory and Legislative Developments 1111
CHAPTER 70 Analysis of Tribal Casino Bonds 1119
Megan Neuburger, Michael Paladino, Jessalynn Moro, and David Litvack
Issuer Credit Factors 1120
Bond Structure and Security Features 1126
Summary 1128
CHAPTER 71 Understanding Variable Rate Demand Obligations 1129
Mitchell Savader
How VRDOs Work 1129
The Need for Cash 1130
The Role of Bond Insurance 1131
CHAPTER 72 State Credit Enhancement Programs for School Districts and Municipalities 1133
Harold B. Burger
Types of State Credit Enhancement Programs 1134
Assessing State Credit Enhancement Programs 1135
Credit Enhancement Program Advantages and Disadvantages 1136
Summary 1139
CHAPTER 73 The ABCs of Charter Schools 1141
Mitchell Savader
Understanding Charter Schools 1141
The Charter 1142
The Relationship between Demand and Financial Success 1144
Summary 1146
CASE STUDIES OF INNOVATIVE AND OTHER SECURITY STRUCTURES CASE STUDY 1
New York City Uses Taxable Municipals After 9/11 for Budget Relief and Affordable Housing 1149
Emily A. Youssouf
CASE STUDY 2 9/11, Subprime Loans, and the Magnolia Park Apartments Bond Default 1153
Michael J. Ross
CASE STUDY 3 Newport News Issues an Energy Savings COP 1161
A. Theodore Palatucci
CASE STUDY 4 Tax-Exempt Airport Finance: Tales from the Friendly Skies 1165
James E. Spiotto
CASE STUDY 5 Toronto’s Highway 407 1185
William E. Oliver
CASE STUDY 6 Disney’s California Adventure and Tax-Exempt Bonds 1191
Hilary E. Feldstein
CASE STUDY 7 Super Bowl XXXII Helps Resolve Bond Default 1195
Bill Huck
CASE STUDY 8 A Tax-Exempt Prepay Natural Gas Purchase Bond 1201
Sandra Mc Donald
CASE STUDY 9 Universal Studios Road Financing: First with Special Assessment Bonds and Second with Tax Increment Financing Bonds 1207
Hilary E. Feldstein
CASE STUDY 10 California’s Workers’ Compensation Insurance Crisis and the Financing of the California Insurance Guarantee Association 1211
Anthony H. Fisher
CASE STUDY 11 Dreamworks Tries to Issue Tax-Exempt Bonds 1215
Rich Saskal
CASE STUDY 12 Financings of the Medical University Hospital Authority of South Carolina 1217
Joseph A. Spiak
CASE STUDY 13 Niagara Falls Memorial Medical Center 1223
Herman R. Charbonneau
CASE STUDY 14 Aruba Airport Authority Airport Revenue Bonds 1227
William E. Oliver
CASE STUDY 15 Yankees versus Mets: A Subway Series 1233
Mitchell Savader
CASE STUDY 16 Good Swap, Bad Swap 1237
Peter Shapiro
CASE STUDY 17 Westminster-Canterbury of the Blue Ridge Continuing Care Retirement Community 1241
Marie S. Pisecki
CASE STUDY 18 Preserving Housing Affordability with Taxable Municipals 1249
Emily A. Youssouf
CASE STUDY 19 Massachusetts Sells LIBOR Index General Obligation Bonds with an Interest Rate Swap 1253
Sylvan G. Feldstein and Patrick Landers
CASE STUDY 20 Developing Hudson Yards with a $2 Billion Bond Issue 1257
James Mc Spiritt
CASE STUDY 21 Seminole Tribe Bets on Taxability 1263
Joseph Krist
APPENDIX A
A Pictorial History of Municipal Bonds 1269
Sylvan G. Feldstein and Peter O’Brien
APPENDIX B
Glossary of Terms 1291
Mitchell Savader
Index 1297
A propos de l’auteur
SYLVAN G. FELDSTEIN, PHD, is a Director in the Investment Department of the Guardian Life Insurance Company of America, specializing in tax-exempt, taxable, and non-U.S. municipal bonds. Prior to this, he was a research manager and analyst at major Wall Street broker-dealers and a rating agency. A graduate of Columbia University, Feldstein has won the Analyst of the Year Award from the National Federation of Municipal Analysts in addition to authoring or editing four other municipal bond industry books.
FRANK J. FABOZZI, PHD, CFA, is Professor in the Practice of Finance at Yale University’s School of Management and the Editor of the Journal of Portfolio Management. In 2002, he was inducted into the Fixed Income Analysts Society Hall of Fame and, in 2007, was the recipient of the C. Stewart Sheppard Award given by the CFA Institute.
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