A Comparison of the True Interest Costs of Competitive and Negotiated Underwritings in the Municipal Bond Market: Note

Braswell, Ronald C.; Nosari, E. Joe; Sumners, DeWitt

doi:10.2307/1992144

Cited by 9 publications

(5 citation statements)

References 12 publications

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“…Consistent with the findings of Clarke (1997), we observe that issues underwritten by the financial advisor have higher interest costs (1.8–2.1 basis points), but the statistical significance is marginal. Larger issues are associated with higher interest costs, consistent with Kidwell and Rogowski (1983) but opposite than that reported by Braswell, Nosari, and Sumners (1983). The coefficient on frequent issuer is significantly positive, indicating that these issuers pay about three basis points higher interest costs 14 .…”

Section: Resultssupporting

confidence: 55%

Does the Quality of Financial Advice Affect Prices?

Allen

Dudney

2010

The Financial Review

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Using a large data sample of 58,562 new municipal issues covering the period from 1984 to 2002, we examine whether the quality of advice provided by a financial advisor affects new issue interest costs. We find that higher-quality financial advisors are associated with statistically significant decreases in new issue yields. The effect of advisor quality on yields is more pronounced for revenue, negotiated, and opaque bond issues than for general obligation and competitively sold issues. However, issuers of revenue or negotiated bonds are more likely to choose a low-quality advisor. Copyright (c) 2010, The Eastern Finance Association.

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Section: Resultssupporting

confidence: 55%

Does the Quality of Financial Advice Affect Prices?

Allen

Dudney

2010

The Financial Review

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“…Many studies have compared the competitive and negotiated sales in terms of their impact on the total financial cost to the issuer. The majority of these Financial Characteristics studies favored competitive sales (Simonsen and Robbins 1996, Joehnk and Kidwell 1979, Braswell, Nosari, and Sumners 1983.…”

Section: Figure 5 Bond Issuance Processmentioning

confidence: 99%

Credit Risk Assessment and Monitoring of TIF Bonds

Bae

Damnjanović

2018

JSF

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Local governments have many different options to secure financing for infrastructure projects, including using Tax-increment financing (TIF) bonds. The key feature of this type of bond is the repayment source: defined as an increment in tax revenue attributed to higher property valuation within the TIF project-impact zone. While the TIF concept brings numerous benefits, such as transferring risks associated with local economic growth, it is also associated with several key challenges. One of the most significant challenges is its complexity. For example, it is often quite difficult to understand how TIF projects affect the surrounding properties, their market valuation, and, consequently, the credit risk of the underlying TIF bond. As a result, potential investors shy away from such assets, which, in turn, translates into increased premiums. This dissertation presents a framework that aims to help the investors, financial advisors, and other key market players better understand the credit risk associated with TIF bonds. The framework focuses on monitoring the performance of the underlying projects as well as other important endogenous and exogenous factors, with the goal of reconstituting the asset credit risk profile and detecting early warning signals of changing conditions. The key benefit of the proposed framework is its capacity to use publicly available, time series data. The case study, illustrating the framework, is based on the "Uptown Development Authority" Tax Increment Reinvestment Zone (TIRZ) bond, which is a type of TIF, structured to support redevelopment projects in Houston, Texas.

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“…Issue size has been found to influence interest cost [Braswell (1981); Joehnk and Kidwell (1979); Kidwell and Rogowski (1983)] as a result of increasing returns. The sign of the issue-size coefficient depends on whether economies or diseconomies of scale exist.…”

Section: Other Issue Characteristicsmentioning

confidence: 99%

Effect Of Legal Counsel Activity On The Cost Of Municipal Bond Offerings

Roden

Poe

Braswell

2011

JABR

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The authors examine the relationship between interest cost to the issuer of municipal bonds and legal counsel associated with the offering. Modeling interest cost with explanatory variables reflecting legal counsel, issue characteristics, and conditions in the financial markets, the authors conclude that offerings in which an active bond counsel participated had average interest costs statistically significantly lower than those without such counsel. Offerings involving issuer<span style="font-style: normal; font-family: "WP TypographicSymbols"; mso-bidi-font-style: italic; mso-ascii-font-family: 'Times New Roman'; mso-hansi-font-family: 'Times New Roman'; mso-char-type: symbol; mso-symbol-font-family: 'WP TypographicSymbols';">=s counsel and activity of underwriter<span style="font-style: normal; font-family: "WP TypographicSymbols"; mso-bidi-font-style: italic; mso-ascii-font-family: 'Times New Roman'; mso-hansi-font-family: 'Times New Roman'; mso-char-type: symbol; mso-symbol-font-family: 'WP TypographicSymbols';">=s counsel experienced statistically higher average interest costs than otherwise. The authors note that their results are consistent with the certification hypothesis.

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A Comparison of the True Interest Costs of Competitive and Negotiated Underwritings in the Municipal Bond Market: Note

Cited by 9 publications

References 12 publications

Does the Quality of Financial Advice Affect Prices?

Does the Quality of Financial Advice Affect Prices?

Credit Risk Assessment and Monitoring of TIF Bonds

Effect Of Legal Counsel Activity On The Cost Of Municipal Bond Offerings

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