WASHINGTON, April 19 Issuers in the U.S.
municipal bond market will soon have an alternative way to
calculate the bids in competitive bond sales and those bidding
on deals will have greater access to information about issuers,
market technology company Ipreo told Reuters on Friday.
In a press release to be published on Monday, Ipreo said the
two services would be available to users of its software in the
second quarter of this year. Representatives from the company
said they would likely be available for use by June.
The new bid calculation, known as TICPlus, was developed by
Andrew Kalotay Associates and builds on the conventional True
Interest Cost, or TIC, method by adding in bonds' call option
values. This will account for the option to refund bonds,
according to Andrew Kalotay Associates.
Kalotay approached Ipreo with the idea and the company found
there was "interest and curiosity across the board" when it
spoke to issuers and sell-side firms, said Allen Williams,
executive vice president and managing director of Global Fixed
Income Capital Markets at Ipreo.
The method has yet to be tested in the marketplace, and
Ipreo will check if its clients find it "makes more economic
sense," he said.
Issuers are waiting to try Ipreo's new service before
forming an opinion, but Wisconsin has already looked at
addressing the call option value in its competitive bids, said
David Erdman, the state's assistant capital finance director.
One result of the review is that the notice of sale for its
general obligation issuance next week requires coupons on bonds
maturing on, or after May 1, 2029, to have a minimum coupon of 4
In the other service to be unveiled, a bidder reviewing a
specific deal on Ipreo would be able to click on a link leading
to a report on the issuer's disclosure filings over the past
The report, compiled by the company RegStat Services, is
intended to give underwriters a convenient way of checking
whether issuers are complying with regulations on disclosure.
The $3.7 trillion U.S. municipal bond market had long
suffered from a dearth of information about issuers, and many of
those selling debt file annual reports and other documents
months and even years late.
The Securities and Exchange Commission and the Municipal
Securities Rulemaking Board both have pressed for better
disclosures and record-keeping, especially given the recent
financial struggles of states and cities, and are developing
stricter regulations on disclosure.
"I think there is strong demand for this. We're in a highly
regulatory environment and this is something clients have to do
today," said Williams, adding Ipreo's customers had expressed
enthusiasm for the quick access to the reports.