Seldom is there a condition which works to the disadvantage of all parties to a transaction. But this occurs frequently in competitive municipal new issues.

It is caused by bidding restrictions which are out of touch with the market and result in bonds which are less attractive to many investors and, therefore, more difficult for the underwriters to sell. The current solutions to the problem are slightly higher interest rates and more spread for the underwriters -- both to the disadvantage of the issuer.

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