- a.k.a. the REV 30 index
- average interest rate on 25 revenue bonds with 30 years to maturity
- help determine interest rates for new issue
- revenue bonds-not rated
- cannot determine-will revenue bond project make all interest and principal payments?
General Obligation 20 year bond index
- helps underwriters to decide how to price new issue based on similar issues in index
- index of interest rates on 20 general obligation bonds
- helps to decide interest rates for a new issue
- same as an A+ (A1) rating
40 Municipal GO bond index
- same as BBB ratings
11 GO bond index
- same as AA ratings
indexes
- published in Bond Buyer on Friday
- determined Thursday every week
- ratings: ability of issuer to make principal and interest payments reliably
30 day visible supply
- weekly list
- underwriters will offer these municipal bonds during next 30 days
- published in Bond Buyer on Mondays
net interest cost
- amount issuer actually pays over the life of the bond
- face value x interest paid over life of bond
- bid at premium, N.I.C.=(total interest cost-premium)
- bid at discount, NIC=(discount + total interest cost)
true interest cost
- interest cost including time value of $
interest rate is influenced by
- information on tax-exempt status of bonds
- issuer's financial condition
- to get this info, underwriter meets with issuer's bond counsel
bond counsel
- assess tax exempt status of bonds
- check existing laws about bond issuance
placement ratio
- in Bond Buyer weekly on Mondays
- number of bonds sold in a week/number of bonds offered that week
- estimate of new municipal bond issue sales
- are people buying bonds?
- are higher rates needed to sell the bonds?
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