Overview of the Municipal Bond Market and Bond Capacity

Overview of the Municipal Bond Market

and Bond Capacity

THE MUNICIPAL BOND MARKET ? Bonds are a type of investment security

? Bonds evidence the issuer's promise to repay the bondholder the principal amount plus interest

? Bonds are typically issued by political subdivisions to provide financing for capital improvements

THE MUNICIPAL BOND MARKET

? Principal is typically repaid in annual installments

o serial bonds

? Interest is typically paid semiannually until principal is repaid at maturity

o interest coupons

? Bonds are typically sold to an investment bank for resale to investors

? Following the initial offering, bonds can be sold and purchased in the secondary market

REGULATORY CONSIDERATIONS

? Bonds are exempt from registration with the U.S. Securities and Exchange Commission

? Texas Attorney General must review and approve issuance of bonds

o Bond counsel prepares transcript of proceedings and submits transcript to Texas Attorney General

o Texas Attorney General reviews transcript to verify that bonds are issued in accordance with law

REGULATORY CONSIDERATIONS

? Publicly offered bonds - issued with assistance of an investment bank - must provide annual and periodic reports on the Electronic Municipal Market Access (EMMA) system

o Hays CISD staff must administer procedures and prepare reports with assistance of the District's financial advisor and bond counsel

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