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The Handbook of Municipal Bonds

Book Description

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 of Contents

  1. The Frank J. Fabozzi Series
  2. Title Page
  3. Copyright Page
  4. Foreword
  5. Preface
  6. Acknowledgments
  7. About the Editors
  8. Contributing Authors
  9. PART One - The Sell Side: The Originators of Deals
    1. CHAPTER 1 - The Central Place of States and Local Governments in American Federalism
      1. THE STATES
      2. THE COMPLEX STRUCTURE OF AMERICAN LOCAL GOVERNMENT
      3. FROM DILLON’S RULE TO HOME RULE
      4. FORMS OF LOCAL GOVERNMENT
      5. METROPOLITAN GOVERNANCE
      6. SUMMARY
    2. CHAPTER 2 - An Overview of Investment Banking
      1. OVERVIEW OF PUBLIC FINANCE BANKING
      2. REGIONAL BROKER-DEALER FIRMS
      3. STRATEGIC ADVANTAGES FOR THE REGIONAL FIRM
      4. DISADVANTAGES FACED BY THE REGIONAL FIRM
      5. IMPORTANCE OF A WELL-DEFINED PLAN
      6. RECENT CHALLENGES
      7. THE OUTCOME OF REGIONAL BANKING EFFORTS
    3. CHAPTER 3 - Role of the Financial Advisor
      1. OVERVIEW OF FINANCIAL ADVISORS AND THEIR ROLES
      2. FINANCIAL ADVISORS IN NEGOTIATED TRANSACTIONS
      3. FINANCIAL ADVISORS IN COMPETITIVE TRANSACTIONS
      4. SECURITIES DEALERS AS FINANCIAL ADVISORS
      5. INDEPENDENT FINANCIAL ADVISORS
      6. PRICING OF FINANCIAL ADVISORY SERVICES
      7. DETAILS REGARDING THE FINANCIAL ADVISOR’S FUNCTIONS
      8. TYPICAL ADVISORY SERVICES PROVIDED IN CONNECTION WITH AN INTEREST RATE SWAP
      9. HOW TO HIRE A FINANCIAL ADVISOR
      10. SUMMARY
    4. CHAPTER 4 - Method of Sale in the Municipal Bond Market
      1. METHOD OF SALE
      2. DEBATE ON THE METHOD OF SALE
      3. HISTORICAL DATA ON USE OF SALE METHOD
      4. SUMMARY
    5. CHAPTER 5 - The Role of Bond Counsel in Public Agency Financing
      1. HISTORY OF BOND COUNSEL
      2. REVIEW OF BOND COUNSEL OPINION
      3. FURTHER TAX DEVELOPMENTS
      4. DISCLOSURE AND SECURITIES LAWS
      5. RECENT DEVELOPMENTS
    6. CHAPTER 6 - The Role of Counsel to the Underwriters
      1. STRUCTURING
      2. SECURITIES LAWS
      3. UNDERWRITING DOCUMENTS
      4. REVIEW OF OTHER BOND DOCUMENTS
      5. BLUE SKY
      6. OPINION
      7. SUMMARY
    7. CHAPTER 7 - Summary of Federal Tax Requirements for Tax-Exempt Bonds
      1. ARBITRAGE
      2. PRIVATE ACTIVITY BONDS
      3. OTHER MISCELLANEOUS RULES, INCLUDING REFUNDINGS
      4. CONCLUSION
    8. CHAPTER 8 - The Role of the Municipal Bond Trustee
      1. THE NATURE OF THE BOND TRUSTEE’S DUTIES AND RESPONSIBILITIES
      2. THE MUNICIPAL BOND TRUSTEE PRECLOSING
      3. ADMINISTRATION OF THE TRANSACTION BY THE BOND TRUSTEE
      4. SELECTED CHALLENGES AND ISSUES FOR MUNICIPAL TRUSTEES POSTISSUANCE
      5. SUMMARY
    9. CHAPTER 9 - Chapter 9: The Last Resort for Financially Distressed Municipalities
      1. HISTORICALLY, BANKRUPTCY HAS BEEN A MECHANISM OF DEBT ADJUSTMENT IN OTHER COUNTRIES
      2. BRIEF HISTORY OF MUNICIPAL BANKRUPTCY LEGISLATION IN THE UNITED STATES
      3. EXISTING MUNICIPAL BANKRUPTCY PROVISIONS
      4. INITIATION OF CHAPTER 9 PROCEEDING AND EFFECT ON BONDHOLDER RIGHTS AND REMEDIES
      5. UNIQUE FEATURES OF CHAPTER 9
      6. THE REQUIRED MAINTENANCE OF MUNICIPAL SERVICE DURING A MUNICIPAL BANKRUPTCY
      7. LABOR CONTRACTS ARE AN IMPORTANT ELEMENT OF THE MUNICIPAL BUDGET WHOSE STATUS IN A CHAPTER 9 HAS BEEN SUBJECT OF DISCUSSION
      8. STATUTE GOVERNING THE REJECTION OF COLLECTIVE BARGAINING AGREEMENT IN CORPORATE CONTEXT
      9. “SPECIAL REVENUES” PLEDGED TO BONDHOLDERS
      10. PAYMENTS TO BONDHOLDERS ARE NOT PREFERENCES
      11. USE OF LETTERS OF CREDIT AS BACKING FOR MUNICIPAL AND CONDUIT OBLIGATIONS
      12. PLAN OF ADJUSTMENT FOR MUNICIPALITY TIME, CONTENT, IMPAIRMENT OF CLAIMS AND ACCEPTANCE
      13. POSTPETITION DISCLOSURE AND SOLICITATION
      14. ACCEPTANCE OF THE PLAN
      15. CONFIRMATION OF PLAN
      16. APPENDIX: CHAPTER 9 CASES FILED AS FEBRUARY 8, 2007
    10. CHAPTER 10 - Subnational Infrastructure Finance in the Emerging Markets: A Financial Guaranty Perspective
      1. THE DEVELOPMENT AND GROWTH OF LOCALLY DENOMINATED CONTRACTUAL SAVINGS POOLS AND CREDIT MARKETS
      2. THE DEVOLUTION REVOLUTION: DECENTRALIZATION AND/OR PRIVATIZATION IS CONTINUING IN VIRTUALLY ALL EMERGING MARKETS
      3. DEVELOPING FINANCIALLY SUSTAINABLE SUBNATIONAL INFRASTRUCTURE CREDITS IN THE EMERGING MARKETS
      4. CONCLUSIONS
    11. CHAPTER 11 - The Role of the Rating Agencies
      1. MOODY’S INVESTORS SERVICE
      2. STANDARD & POOR’S
      3. FITCH RATINGS
      4. SUMMARY
    12. CHAPTER 12 - Municipal Bond Refundings
      1. REFUNDING OVERVIEW
      2. REASONS TO SELL REFUNDING BONDS
      3. ISSUES RELATING TO STRUCTURING A REFUNDING BOND ISSUE
      4. WHEN SHOULD AN ISSUER REFUND PRIOR BONDS?
      5. REFUNDINGS AND DERIVATIVES
      6. COMPETITIVE VERSUS NEGOTIATED SALE
      7. CONCLUSIONS
    13. CHAPTER 13 - Public-Private Partnerships
      1. HISTORY
      2. THE PROCESS OF PRIVATIZATION
      3. SUMMARY
  10. PART Two - The Sell Side: Distribution and Market-Making Roles
    1. CHAPTER 14 - The Role of the Underwriter
      1. THE UNDERWRITER’S ROLE IN CONTEXT
      2. WHEN DOES THE UNDERWRITER BECOME INVOLVED IN THE PROCESS?
      3. THE LEAD-UP TO PRICING
      4. SUMMARY
    2. CHAPTER 15 - The Roles of Traders and Brokers
      1. TRADERS
      2. TYPES OF TRADERS
      3. WATCHING THE TAXABLE MARKETS
      4. TRADING DISCIPLINE AND MENTAL ATTITUDES
      5. WHO BECOMES A TRADER?
      6. BROKERS
      7. A WORD ON E-COMMERCE
      8. SUMMARY
    3. CHAPTER 16 - Municipal Arbitrage and Tender Option Bonds
      1. RELATIVE VALUE—WHAT “SHOULD” A MUNICIPAL BOND BE WORTH?
      2. HOW MUNICIPAL ARBITRAGE WORKS
      3. WHERE DOES THE MUNICIPAL YIELD CURVE’S STEEPNESS COME FROM?
      4. CONCLUSION
      5. APPENDIX: TENDER OPTION BONDS IN A NUTSHELL
    4. CHAPTER 17 - Interest Rate Swaps and Their Application to Tax-Exempt Financing
      1. WHAT ARE SWAPS AND HOW DO THEY WORK?
      2. TYPES OF SWAPS AND OTHER HEDGES
      3. USES AND BENEFITS
      4. BUSINESS RISKS
      5. HOW TO ACQUIRE A SWAP
      6. LEGAL ISSUES
      7. TAX ISSUES
      8. DOCUMENTATION AND NEGOTIATION
      9. AFTER THE CLOSE: POSTTRADE MANAGEMENT
      10. APPENDIX: GLOSSARY OF KEY TERMS
    5. CHAPTER 18 - The Regional Firm: Its Customers, Traders, and Institutional Salespeople
      1. UNDERSTANDING “REGIONAL”
      2. TRADING
      3. THE REGIONAL INSTITUTIONAL SALESPERSON AND THEIR CUSTOMERS
      4. THE SKILLS OF THE SALESPERSON
    6. CHAPTER 19 - Changing Roles of Buyers and Sellers of Municipal Bonds: One Participant's View
      1. COMMUNICATIONS AND TECHNOLOGY
      2. THE LEGAL OPINION AND INDENTURE OF A MUNICIPAL BOND
      3. THE ROLE OF CREDIT AGENCIES
      4. CHANGES IN TAX-EXEMPT STATUS
      5. PRICING TRANSPARENCY
      6. THE BUYERS OF MUNICIPALS
      7. SELLERS OF MUNICIPAL BONDS
      8. THE FUTURE AS PROLOGUE
    7. CHAPTER 20 - The Depository Trust Company and Real-Time Price Transparency
      1. THE DEPOSITORY TRUST & CLEARING CORPORATION
      2. SUMMARY
    8. CHAPTER 21 - i-Deal/Ipreo: The Transaction Platform
      1. THE EVOLUTION OF NEW-ISSUE TECHNOLOGY
      2. ORDER ENTRY
      3. THE ISSUER AND PROSPECTUS DELIVERY
      4. THE FUTURE
      5. SUMMARY
  11. PART Three - Compliance Issues
    1. CHAPTER 22 - The Municipal Securities Rulemaking Board
      1. ORGANIZATION OF THE MSRB AND THE SCOPE OF RULEMAKING AUTHORITY
      2. PROFESSIONAL QUALIFICATIONS, SUPERVISION, RECORDKEEPING AND COMPLIANCE
      3. UNIFORM PRACTICE RULES
      4. MUNICIPAL MARKET TRANSPARENCY AND THE MSRB
      5. FAIR DEALING AND SUITABILITY
      6. MUNICIPAL SECURITIES INFORMATION LIBRARY
      7. MARKET INTEGRITY
      8. ADDITIONAL INFORMATION REGARDING MSRB
    2. CHAPTER 23 - The Role of the Securities and Exchange Commission
      1. FRAMEWORK OF THE FEDERAL SECURITIES LAWS
      2. APPLICATION TO MUNICIPAL SECURITIES
      3. RULE 15(c)2-12
    3. CHAPTER 24 - Sarbanes-Oxley and the Securities and Exchange Commission
      1. THE ACT
      2. CONCLUSION
    4. CHAPTER 25 - Using Auditing Techniques to Develop Investment Adviser Compliance Procedures
      1. GETTING STARTED
      2. UNDERSTANDING THE PROCESS
      3. DOCUMENT THE PROCESS
      4. REVIEW THE PROCESS
      5. REVISE THE PROCESS DOCUMENTATION
      6. SUMMARY
    5. CHAPTER 26 - Rule 2a-7: Legal and Research Issues for Tax-Exempt Money Market Funds
      1. DEFINITION OF A TAX-EXEMPT MONEY MARKET FUND
      2. GENERAL REQUIREMENTS OF RULE 2a-7
      3. ELIGIBLE SECURITIES FOR TAX EXEMPT FUNDS
      4. APPLICATION OF RULE 2a-7 TO MUNICIPAL SECURITIES
      5. POSTACQUISITION CONSTRAINTS IMPOSED BY RULE 2a-7
      6. SUMMARY
  12. PART Four - Fixed Income Analysis of Municipal Products
    1. CHAPTER 27 - Evaluation of Municipal Bonds
      1. THE NEED FOR EVALUATIONS
      2. TOOLS OF EVALUATION
      3. ADJUSTING FOR DIFFERENT TYPES OF MUNICIPAL BONDS
      4. OTHER CONSIDERATIONS
      5. THE FUTURE OF MUNICIPAL BOND EVALUATION
    2. CHAPTER 28 - Valuation of Municipal Bonds with Embedded Options
      1. UNDERLYING PRINCIPLES
      2. OVERVIEW OF BOND VALUATION
      3. VALUATION MODEL
      4. SPECIFIC ADJUSTMENTS TO THE VALUATION MODEL FOR MUNICIPAL BONDS
      5. TAX ADJUSTMENTS TO THE MODEL
      6. HORIZON PRICE
      7. OTHER VALUES CALCULATED FROM THE MODEL
      8. RELATIVE VALUE ANALYSIS OF MUNICIPAL BONDS
      9. SUMMARY
    3. CHAPTER 29 - Analyzing and Evaluating Tax-Exempt Indexed Floaters: Investor and Issuer Perspectives
      1. BREAKEVEN EQUATION FOR THE ISSUER
      2. RISK ANALYSIS OF LIBOR-INDEXED FLOATERS
      3. OTHER PERCENT LIBOR-INDEXED FLOATERS
      4. PERCENT BMA-INDEXED FLOATERS
      5. CMS AND BMS
      6. PERCENT CMS-INDEXED STRUCTURES
      7. RISKS OF PERCENT CMS AND PERCENT BMS
      8. SUMMARY
    4. CHAPTER 30 - Municipal Inverse Floating Rate Securities
      1. DESCRIPTION
      2. TAX TREATMENT
      3. COMPUTATIONS
      4. ACCOUNTING TREATMENT
      5. TENDER OPTION BONDS
      6. SUMMARY
    5. CHAPTER 31 - Analyzing Portfolios Daily
      1. A FOUR-LEVEL FRAMEWORK FOR PORTFOLIO ASSETS
      2. CREDIT-LEVEL ANALYSIS
      3. BASIC HOLDING-LEVEL ANALYSIS
      4. TOTAL RETURN PERFORMANCE
      5. SIMULATIONS
      6. PORTFOLIO STRUCTURE: COMPLIANCE AND TARGETS
      7. REPORTING
      8. A SECRET FORMULA?
      9. SUMMARY: 20 INGREDIENTS FOR SUCCESS
    6. CHAPTER 32 - Discovering Relative Value Using Custom Indexes
      1. INTUITIVE PATTERNS
      2. EMPIRICAL PATTERNS
      3. DISCOVERY
      4. CAVEATS AND DISCLAIMERS
      5. CONCLUSION
    7. CHAPTER 33 - Municipal Bond Swaps
      1. DESCRIPTION OF A BOND SWAP
      2. TAX SWAPPING
      3. OTHER TYPES OF MUNICIPAL BOND SWAPS
      4. SUMMARY
    8. CHAPTER 34 - The Tax Treatment of Municipal Bonds
      1. FEDERAL TAX TREATMENT OF MUNICIPAL BONDS
      2. CALCULATING THE EFFECTIVE TAX RATE ON INTEREST INCOME FROM OUT-OF-STATE MUNICIPAL BONDS
      3. SUMMARY
  13. PART Five - The Buy Side: Institutional Investors
    1. CHAPTER 35 - Managing a National Municipal Bond Fund
      1. THE INVESTOR WHO BUYS THE FUND
      2. NATIONAL VERSUS STATE-SPECIFIC FUNDS
      3. TOTAL RATE OF RETURN
      4. MANAGING A FUND BY RELATIVE VALUE
      5. ISSUES OF COUPON AND STRUCTURE
      6. TRADITIONAL BUYERS VERSUS THE ARBITRAGEURS
      7. CONCLUSION
    2. CHAPTER 36 - Managing a High-Yield Municipal Fund
      1. HIGH-YIELD BORROWERS
      2. HIGH-YIELD MUNICIPAL BOND FUND TRACK RECORD
      3. CREDIT ANALYSIS
      4. SECTOR ALLOCATION
      5. TRADING OPPORTUNITIES
      6. STORY BONDS
      7. OPPORTUNITY BONDS
      8. CREDIT IMPROVEMENT AND ENHANCEMENT
      9. DERIVATIVES
      10. THE USE OF BENCHMARKS
      11. HIGH-YIELD MUNICIPAL FUND INFRASTRUCTURE
      12. SUMMARY
    3. CHAPTER 37 - Managing Municipal Bonds for Property and Casualty Insurance Companies for Total Return
      1. BUSINESS OF PROPERTY AND CASUALTY INSURANCE COMPANIES
      2. COMBINED RATIO
      3. TOTAL RETURN VERSUS BENCHMARK
      4. REGULATORY FACTORS
      5. TAX RISK
      6. CREDIT RISK
      7. INTEREST RATE RISK
      8. CONCLUSION
    4. CHAPTER 38 - The Role of Hedge Funds in the Municipal Market
      1. RATIO CURVES
      2. HEDGE FUND ACTIVITY
      3. CONCLUSION
    5. CHAPTER 39 - Managing Municipal Bond Portfolios for High-Net-Worth Investors
      1. A LIVING, BREATHING HUMAN BEING
      2. EMOTIONAL UPS AND DOWNS
      3. TRANSPARENCY
      4. EDUCATION
      5. THE STARTING POINT
      6. THE CLIENT’S EXISTING SITUATION
      7. UNCOVERING CLIENT OBJECTIVES
      8. WHAT IS THE CLIENT REALLY TRYING TO ACHIEVE IN THE BOND MARKET?
      9. ARTICULATING OBJECTIVES AND SETTING PARAMETERS
      10. PERFORMANCE MEASUREMENT
      11. UNCOVERING VALUE IN THE MUNICIPAL BOND MARKET
      12. CONFRONTING INTEREST RATE RISK
      13. CONFRONTING CREDIT RISK
      14. CONFRONTING CALL RISK
      15. CONFRONTING LIQUIDITY RISK
      16. YIELD CURVE ANALYSIS
      17. BOND SWAPPING
      18. USING BALANCE IN PORTFOLIO CONSTRUCTION AND RECONSTRUCTION
      19. PORTFOLIO DISTRIBUTIONS
      20. MUNICIPAL BONDS: A MOST NECESSARY INVESTMENT
    6. CHAPTER 40 - Municipal Credit Default Swaps
      1. SINGLE-NAME MUNICIPAL CDS CONTRACT
      2. USES OF MUNICIPAL CDS BY PORTFOLIO MANAGERS
      3. SECOND GENERATION OF CREDIT DEFAULT SWAPS
      4. SUMMARY
    7. CHAPTER 41 - Municipal Collateralized Debt Obligations
      1. CDO BASICS
      2. MUNI CDOS
      3. SUMMARY
    8. CHAPTER 42 - Performance Attribution of Municipal Bonds
      1. WHICH APPROACH FOR MUNICIPAL BONDS?
      2. WHAT DOESN’T WORK FOR MUNICIPAL BOND ATTRIBUTION
      3. THE BETTER APPROACH FOR MUNICIPAL BOND ATTRIBUTION
      4. MATHEMATICS OF RETURNS-BASED ATTRIBUTION
      5. EXAMPLES OF RETURNS-BASED ATTRIBUTION FOR MUNICIPAL BONDS
      6. CLIENT STORIES: APPLYING MUNICIPAL BOND ATTRIBUTION
      7. SUMMARY
  14. PART Six - Credit Analysis
    1. CHAPTER 43 - The Role of the National Federation of Municipal Analysts in Promoting Better Disclosure
      1. SUMMARY OF NFMA INITIATIVES
      2. THE SPECIAL IMPORTANCE OF DISCLOSURE
      3. A DETAILED LOOK AT THE NFMA’S RECOMMENDED BEST PRACTICES
      4. PROCEDURE FOR DEVELOPING RBP DOCUMENTS
      5. THE MECHANICAL STEPS USED TO DEVELOP AN RBP DOCUMENT
      6. CURRENT ISSUES AND CHALLENGES FACING THE NFMA
    2. CHAPTER 44 - A History of Modern Municipal Defaults
      1. ANALYSIS OF DEFAULTS OF MUNICIPAL DEBT IN THE UNITED STATES
      2. LESSONS LEARNED FROM TROUBLED MUNICIPAL FINANCING
      3. SUMMARY OF LESSONS LEARNED
      4. RULES FOR SURVIVAL
      5. APPENDIX: THE STRUCTURE FOR OVERSIGHT AND EMERGENCY FINANCING
    3. CHAPTER 45 - New Issues in Municipal Accounting
      1. STRUCTURE OF GOVERNMENTAL FINANCIAL STATEMENTS
      2. INFORMATION PRESENTED IN BASIC FINANCIAL STATEMENTS AND RSI
      3. MD&A
      4. SUMMARY
    4. CHAPTER 46 - Managing a Buy-Side Municipal Bond Research Department
      1. ASSESSMENT OF CHALLENGES
      2. SUMMARY
    5. CHAPTER 47 - The Role of an Activist Bond Analyst
      1. ACTIVIST BOND ANALYST’S APPROACH TO IMPROVING STRESSED OR DETERIORATING CREDITS
      2. WATCHFUL WAITING
      3. ASSET PRESERVATION
      4. THE CONFERENCE CALL
      5. COVENANT WAIVERS/CONSULTANTS
      6. PROJECT SALE TO EXTERNAL BUYER
      7. THE DEBT SERVICE RESERVE FUND
      8. DELEVERAGING
      9. CONCLUSION
    6. CHAPTER 48 - How to Analyze General Obligation Bonds
      1. THE ISSUER’S DEBT STRUCTURE AND SECURITY FOR GENERAL OBLIGATION BONDS
      2. THE ISSUER’S BUDGETARY OPERATIONS
      3. THE ISSUER’S REVENUE STRUCTURE
      4. THE ECONOMY
      5. THE MORE IMPORTANT DEBT RATIOS
      6. CONCLUSION
    7. CHAPTER 49 - General Analytical Framework for Assessing the Credit Worthiness of Revenue Bonds
      1. LIMITS OF THE BASIC SECURITY
      2. FLOW-OF-FUNDS STRUCTURE
      3. RATE, USER-CHARGE OR DEDICATED REVENUE AND TAX COVENANTS
      4. THE PRIORITY OF PLEDGED REVENUE CLAIMS
      5. THE ADDITIONAL BONDS TEST
      6. OTHER RELEVANT COVENANTS AND ISSUES
    8. CHAPTER 50 - How to Analyze Airport Revenue Bonds
      1. AIRPORT OWNERSHIP STRUCTURES
      2. PASSENGER DEMAND CHARACTERISTICS
      3. COMPETITION
      4. USE AND LEASE AGREEMENTS
      5. GATE CONTROL
      6. AIRPORT MANAGEMENT
      7. CONCLUSION
    9. CHAPTER 51 - Land-Secured Bonds
      1. ADVANTAGES OF LAND-SECURED BONDS
      2. GENERAL CHARACTERISTICS OF LAND-SECURED BONDS
      3. CREDIT CRITERIA
      4. ROLE OF THE DEVELOPER
      5. DISCLOSURE
      6. THE LAND-SECURED BOND MARKET
      7. BOND STRUCTURES
      8. CONCLUSION
    10. CHAPTER 52 - Hospital Bond Analysis
      1. NATIONAL LEVEL OVERVIEW
      2. LOCAL LEVEL REVIEW
      3. HOSPITAL LEVEL REVIEW
      4. TRANSACTION-SPECIFIC RISKS
      5. EXAMPLES OF HOSPITAL DOWNGRADES
      6. CONCLUSION
    11. CHAPTER 53 - Single-Family Housing Bonds
      1. THE APPEAL OF SINGLE-FAMILY BONDS
      2. SF BOND ISSUANCE RECORD IN 2006
      3. CREDIT STRENGTH OF SF BONDS
      4. A UNIQUE BASKET OF CALL OPTIONS
      5. PREPAYMENTS IN SF BONDS
      6. MUNICIPAL PREPAYMENT SPEEDS
      7. OTHER WAYS OF HANDLING PREPAYMENTS
      8. PAC BONDS
      9. DISCRIMINATING BETWEEN PAC BONDS
      10. PASSTHROUGHS
      11. LOCKOUT BONDS
      12. CROSSCALLING
      13. THE TEN YEAR RULE
      14. UNIVERSAL CAP REGULATIONS
      15. THE UNUSED PROCEEDS CALL
      16. OPTIONAL REDEMPTIONS IN SINGLE-FAMILY BONDS
      17. PRICING SINGLE-FAMILY BONDS
      18. CONCLUDING REMARKS
    12. CHAPTER 54 - Multifamily Bonds
      1. MULTIFAMILY BOND MARKET PARAMETERS
      2. AMT PENALIZES THE SECTOR
      3. MULTIFAMILY SUPPLY OUTLOOK POSITIVE
      4. VOLUME CAP CONSTRAINS BOND ISSUANCE
      5. GREAT DIVERSITY OF ISSUERS
      6. ABUNDANCE OF PROJECT TYPES
      7. MULTIFAMILY BONDS: DEFAULT RATES
      8. MULTIFAMILY DEFAULT CYCLES
      9. AN ARRAY OF CREDIT ENHANCEMENTS
      10. THE LOW INCOME HOUSING TAX CREDIT
      11. FHA INSURANCE
      12. RISK SHARING: SUPERIOR FHA PROGRAM
      13. GNMA-BACKED MULTIFAMILY BONDS
      14. PROJECT-BASED SECTION 8
      15. FHA SECTION 8 MARK-TO-MARKET
      16. SECTION 236 INTEREST SUBSIDY
      17. “AFFORDABLE HOUSING” PROJECTS
      18. TAX OPINION RISKS
      19. MULTIFAMILY BOND REDEMPTIONS
      20. PREPAYMENTS IN MULTIFAMILY BONDS
      21. OTHER CALL OPTIONS IN MULTIFAMILY BONDS
      22. CONCLUSION
    13. CHAPTER 55 - Tax-Exempt Electric Utility Debt
      1. STRUCTURE OF THE U.S. ELECTRIC INDUSTRY
      2. COST OF ELECTRICITY
      3. CHARGES FOR SERVICE
      4. CREDIT CONSIDERATIONS
      5. SUMMARY
    14. CHAPTER 56 - How to Analyze Startup Continuing Care Retirement Community Bonds
      1. ACCOMMODATION AND SERVICE OPTIONS
      2. RESIDENCY CONTRACTS
      3. OWNERSHIP, GOVERNANCE, AND MANAGEMENT
      4. DEMAND ANALYSIS OF INDEPENDENT LIVING UNITS
      5. THE ANALYSIS OF ADVANCE FEE DEPOSITS AND MONTHLY SERVICE FEE PRICES
      6. ASSISTED LIVING UNIT AND NURSING CARE BED DEMAND ANALYSIS
      7. UTILIZATION AND FILL-UP EXPECTATIONS
      8. FINANCIAL STATEMENT ANALYSIS
      9. RATIO ANALYSIS
      10. LEGAL SECURITY FEATURES AND COVENANT CONSIDERATIONS
      11. CONTINUING DISCLOSURE
      12. SUMMARY
    15. CHAPTER 57 - How to Analyze Tobacco Bonds
      1. BACKGROUND
      2. ANALYSIS OF STRUCTURAL RISK
      3. ANALYSIS OF CORPORATE CREDIT RISK
      4. ANALYSIS OF CASH FLOW RISK
      5. ANALYSIS OF LITIGATION RISK
      6. CONCLUSION
    16. CHAPTER 58 - Toll Road Analysis
      1. HISTORY
      2. KEY ANALYTICAL FACTORS
      3. CONCLUSION
    17. CHAPTER 59 - Water and Sewer Bond Analysis
      1. STRUCTURE
      2. MANAGEMENT
      3. ECONOMIC BASE
      4. FINANCIAL RATIOS
      5. BOND SECURITY
      6. ENVIRONMENTAL ISSUES
      7. OTHER CONSIDERATIONS
      8. CONCLUSION
  15. PART Seven - Special Security Structures and Their Analysis
    1. CHAPTER 60 - Evaluating Tax-Exempt Commercial Paper
      1. OVERVIEW OF COMMERCIAL PAPER
      2. REPAYMENT OF COMMERCIAL PAPER NOTES
      3. ANALYZING VARIOUS SOURCES OF REPAYMENT FOR COMMERCIAL PAPER
      4. ANALYZING COMMERCIAL PAPER WITHOUT ENHANCEMENT
      5. SUMMARY
    2. CHAPTER 61 - The Use of Letters of Credit in Connection with Municipal Securities
      1. OVERVIEW OF LOCS
      2. CONSIDERATIONS IN REVIEWING A LOC-BACKED SECURITY
      3. CONCLUSION
    3. CHAPTER 62 - How to Analyze Tax, Bond, and Grant Anticipation Notes
      1. TWO MAJOR PURPOSES OF NOTES
      2. SECURITY BEHIND TAX AND REVENUE ANTICIPATION NOTES
      3. INFORMATION NEEDED BEFORE BUYING TAX OR REVENUE ANTICIPATION NOTES
      4. SUMMARY
    4. CHAPTER 63 - How to Analyze Refunded Municipal Bonds
      1. PURE VERSUS MIXED ESCROW FUNDS
      2. WHAT ARE THE REASONS FOR REFUNDINGS?
      3. TWO TYPES OF REFUNDED BONDS
      4. DETERMINING THE SAFETY OF THE REFUNDED BONDS
    5. CHAPTER 64 - Pollution Control Revenue, Industrial Development Revenue, and Conduit Financing Bonds
      1. SECURITY
      2. RESTRICTIONS ON ISSUANCE AND REFUNDING OF PCR/IDR DEBT
      3. CALL FEATURES
      4. SUMMARY
    6. CHAPTER 65 - How to Analyze FHA-Insured Mortgage Hospital Bonds
      1. FHA HOSPITAL MORTGAGE INSURANCE
      2. CREDIT RISK
      3. THE “PRUDENT MAN” EVALUATION APPROACH
      4. SUMMARY
    7. CHAPTER 66 - How to Analyze Higher Education Bonds
      1. THE INSTITUTION
      2. USE OF BOND PROCEEDS
      3. SECURITY
      4. DEGREES AND PROGRAMS
      5. STUDENT DEMAND
      6. MANAGEMENT AND GOVERNANCE
      7. FACULTY AND STAFF
      8. TUITION AND FINANCIAL AID
      9. FINANCIAL STATEMENTS
      10. ENDOWMENT FUNDS
      11. PLANT AND FACILITIES
      12. FUNDRAISING ABILITIES
      13. DEFINITIONS OF CERTAIN TERMS
      14. CONTINUING DISCLOSURE
      15. CONCLUSION
    8. CHAPTER 67 - Analyzing Human Service Provider Bonds
      1. MILESTONES IN THE DEVELOPMENT OF HUMAN SERVICE PROVIDERS
      2. RISK FACTORS ASSOCIATED WITH HUMAN SERVICE PROVIDERS
      3. SUMMARY
    9. CHAPTER 68 - How to Analyze the Municipal Bond Insurers and the Bonds They Insure
      1. WHAT IS MUNICIPAL BOND INSURANCE?
      2. MUNICIPAL BOND INSURANCE BENEFITS
      3. ADDITIONAL BENEFITS OF BOND INSURANCE
      4. TYPES OF MUNICIPAL BOND INSURANCE
      5. MUNICIPAL BOND INSURANCE PROVIDERS
      6. OTHER MUNICIPAL BOND INSURANCE PROVIDERS
      7. REINSURANCE
      8. TELLING THE DIFFERENCE
      9. FINANCIAL FACTORS
      10. OTHER FINANCIAL FACTORS
      11. OTHER BUSINESSES
      12. CONCLUSION
    10. CHAPTER 69 - Student Loan Financing: Risk Evaluation Tax-Exempt and Taxable Markets Converge
      1. TAX-EXEMPT ISSUERS AND PRIVATIZATION TRENDS
      2. SYSTEMIC SHIFT-RISK TRANSFERENCE
      3. GUARANTEED VERSUS PRIVATE LOANS
      4. RISK PROFILE EVOLVES
      5. SUMMARY
      6. APPENDIX: RECENT INVESTIGATORY AND LEGISLATIVE DEVELOPMENTS
    11. CHAPTER 70 - Analysis of Tribal Casino Bonds
      1. ISSUER CREDIT FACTORS
      2. BOND STRUCTURE AND SECURITY FEATURES
      3. SUMMARY
    12. CHAPTER 71 - Understanding Variable Rate Demand Obligations
      1. HOW VRDOS WORK
      2. THE NEED FOR CASH
      3. THE ROLE OF BOND INSURANCE
    13. CHAPTER 72 - State Credit Enhancement Programs for School Districts and Municipalities
      1. TYPES OF STATE CREDIT ENHANCEMENT PROGRAMS
      2. ASSESSING STATE CREDIT ENHANCEMENT PROGRAMS
      3. CREDIT ENHANCEMENT PROGRAM ADVANTAGES AND DISADVANTAGES
      4. SUMMARY
    14. CHAPTER 73 - The ABCs of Charter Schools
      1. UNDERSTANDING CHARTER SCHOOLS
      2. THE CHARTER
      3. THE RELATIONSHIP BETWEEN DEMAND AND FINANCIAL SUCCESS
      4. SUMMARY
  16. Case Studies of Innovative and Other Security Structures
    1. CASE STUDY 1 - New York City Uses Taxable Municipals After 9/11 for Budget Relief and Affordable Housing
      1. FILLING A BUDGET GAP
      2. GENERATING MONEY FOR AFFORDABLE HOUSING
      3. SOURCES
    2. CASE STUDY 2 - 9/11, Subprime Loans, and the Magnolia Park Apartments Bond Default
      1. OVERVIEW OF THE PROJECT AND THE OWNER
      2. PITFALLS AND RISKS TO INVESTORS
      3. DETERMINANTS OF VALUE AND ASSET PROTECTION
      4. PROBLEMS WITH THE SENIOR/SUBORDINATE BOND STRUCTURE
      5. ANALYSIS OF THE REAL ESTATE
      6. CHALLENGES FACED BY MAGNOLIA PARK
      7. RECALCULATION OF THE CAPITALIZATION RATE FOR DISTRESS CREDITS
      8. RECOVERY RATES FOR THE SENIOR SECURED BONDS
      9. SUMMARY
    3. CASE STUDY 3 - Newport News Issues an Energy Savings COP
    4. CASE STUDY 4 - Tax-Exempt Airport Finance: Tales from the Friendly Skies
      1. BACKGROUND
      2. THE DIFFERENCE IN TREATMENT OF A LEASE AND A MORTGAGE UNDER THE BANKRUPTCY CODE: WHY DOES IT MATTER?
      3. FACTORS COURTS TYPICALLY CONSIDER TO DETERMINE IF A LEASE IS A TRUE LEASE OR A FINANCING ARRANGEMENT
      4. THE BANKRUPTCY COURT’S ANALYSIS OF THE SFO, JFK, AND LAX TRANSACTIONS AS FINANCING ARRANGEMENTS
      5. THE BANKRUPTCY COURT’S ANALYSIS OF THE DENVER TRANSACTION AS A TRUE LEASE
      6. THE DISTRICT COURT’S REVIEW OF THE DENVER, SFO, JFK, AND LAX TRANSACTIONS
      7. THE SEVENTH CIRCUIT’S REVIEW OF THE SFO, JFK, LAX, AND DEN TRANSACTIONS
      8. CONCLUSION
      9. APPENDIX A - United Municipal Bonds
      10. APPENDIX B
    5. CASE STUDY 5 - Toronto’s Highway 407
    6. CASE STUDY 6 - Disney’s California Adventure and Tax-Exempt Bonds
      1. HOW THE SECURITY STRUCTURE WORKS
      2. THE FLOW OF FUNDS
      3. BOND RATINGS
      4. CONCLUSION
      5. SOURCES
    7. CASE STUDY 7 - Super Bowl XXXII Helps Resolve Bond Default
      1. FIRST SAN DIEGO RIVER IMPROVEMENT PROJECT
      2. COULD WE KEEP THE BONDS CURRENT?
      3. THE LAW WORKS (SLOWLY)
      4. WHAT DO YOU MEAN “THE NUMBERS DON’T WORK”?
      5. CITY OF SAN DIEGO—AND SUPER BOWL XXXII—TO THE RESCUE
    8. CASE STUDY 8 - A Tax-Exempt Prepay Natural Gas Purchase Bond
      1. ROSEVILLE TRANSACTION STRUCTURE
      2. BENEFITS TO THE CITY
    9. CASE STUDY 9 - Universal Studios Road Financing: First with Special Assessment Bonds and Second with Tax Increment Financing Bonds
      1. HOW THE SECURITY STRUCTURE WORKED IN THE FIRST BOND ISSUE
      2. BOND RATINGS
      3. THE SECOND BOND ISSUE
      4. CONCLUSION
      5. SOURCES
    10. CASE STUDY 10 - California’s Workers’ Compensation Insurance Crisis and the Financing of the California Insurance Guarantee Association
      1. PLAN OF FINANCE
      2. SECURITY FOR THE BONDS
      3. BOND RATINGS AND CREDIT ENHANCEMENT
      4. SUBSEQUENT EVENTS
    11. CASE STUDY 11 - Dreamworks Tries to Issue Tax-Exempt Bonds
    12. CASE STUDY 12 - Financings of the Medical University Hospital Authority of South Carolina
      1. REORGANIZATION FOR THE FUTURE
      2. STRATEGIC PLANNING
      3. PHASE I
      4. STRUCTURE OF THE FINANCING: FHA SECTION 242 HOSPITAL MORTGAGE INSURANCE
      5. CREATION OF THE ENHANCED TOTAL RETURN CONTRACT
      6. THE CENTRAL ENERGY PLANT
      7. EQUIPMENT LEASE/PURCHASE PROGRAM
      8. SUMMARY
    13. CASE STUDY 13 - Niagara Falls Memorial Medical Center
    14. CASE STUDY 14 - Aruba Airport Authority Airport Revenue Bonds
    15. CASE STUDY 15 - Yankees versus Mets: A Subway Series
      1. SOURCES
    16. CASE STUDY 16 - Good Swap, Bad Swap
      1. GOOD SWAPS
      2. BAD SWAPS
    17. CASE STUDY 17 - Westminster-Canterbury of the Blue Ridge Continuing Care Retirement Community
      1. OVERVIEW
      2. STRENGTHS
      3. WEAKNESSES/RISKS
      4. STATUS UPDATES
      5. LEARNED IN HINDSIGHT
      6. WEIGHING THE RISKS
      7. SUMMARY
    18. CASE STUDY 18 - Preserving Housing Affordability with Taxable Municipals
      1. SOURCES
    19. CASE STUDY 19 - Massachusetts Sells LIBOR Index General Obligation Bonds with an Interest Rate Swap
      1. SOURCES
    20. CASE STUDY 20 - Developing Hudson Yards with a $2 Billion Bond Issue
      1. SOURCES OF FINANCIAL SUPPORT
      2. OVERCOMING DELAY IN REALIZING REVENUES
      3. THE BOND SALE
    21. CASE STUDY 21 - Seminole Tribe Bets on Taxability
  17. APPENDIX A - A Pictorial History of Municipal Bonds
  18. APPENDIX B - Glossary of Terms
  19. Index