WASHINGTON -- Two groups representing municipal issuers and analysts announced yesterday that they are jointly developing the first standardized formats for the disclosure of information on 15 kinds of bonds to the secondary market.
The move by the Government Finance Officers Association and the National Federation of Municipal Analysts is viewed by various market observers as an important building block in the push for continuing disclosure, which has been sluggish in various market sectors.
The initiative expands on what pioneering issuers in one market sector -- state, single-, and multifamily housing bonds -- have been doing since last year. Roughly 30 states already use a standardized format to send secondary market disclosure information on single-family housing issues to nationally recognized repositories, said George Axlund, executive director of the Wyoming Community Development Authority.
In addition, about eight states send data on multifamily housing bonds to repositories, said Mr. Axlund, who heads the National Council of State Housing Agencies' municipal disclosure project. Housing agencies file quarterly, while the GFOA and NFMA are calling for at least annual disclosure.
The Association of Local Housing Finance Agencies recently developed similar formats for its 130 members that would be filed annually. John Murphy, the association's executive director, said his group will survey members in the next month to determine if they have begun using the forms.
Under the joint GFOA-NFMA secondary market project, 15 forms will be included in a publication scheduled for release next year. Issuers can get a snapshot of what information may be sought on the forms from draft guidelines for secondary market disclosure being circulated by NFMA. Comments will be accepted until Sept. 18.
The 15 categories of bonds are: college and university, electric utility, continuing care retirement center, hospital, housing, resource recovery, student loan, general obligation bonds and notes, quasi-general obligation bonds such as Mello-Roos and sales tax revenue bonds, lease rental bonds and certificates of participation, airport revenue, transportation revenue bonds, toll road revenue, water and sewer, and miscellaneous issues.
In a related move, J.J. Kenny announced it will begin automatically sending market sensitive information by fax machine to any party for $75 a month. Currently, market participants can get information from Kenny by mail or electronically over the Kenny Drake Screen, the KennyWire teleprinter, and via Telerate. Subscribers to the new system can call an 800 number and get faxes of backup notices.
"There are tons of people out there who don't have computer access to Kenny Alert, but almost everybody has a fax machine these days," said a Kenny spokesman.
Regarding the GFOA-NFMA project, "it's the first time to my knowledge that there are industrywide formats for all sectors," said Victoria Westall, chairwoman of the municipal analysts group and a director of municipal research with Edward D. Jones & Co. "Housing was the leader in this area. We're trying to build on their success. We're going to take those categories and come up with forms people can use," added Ms. Westall.
The finance officers association and municipal analysts federation contend the formats will ultimately be time savers for issuers who are repeatedly asked to provide information on a variety of forms sent by individual analysts.
"This should minimize the work" in meeting individual requests, Ms. Westall said. "If you have a form and you fill it out, you can send it to everybody. This should answer a majority of the questions" issuers get, she added.
"We really think it's quite important," said Donald Robinson, a partner with Orrick, Herrington & Sutliffe in New York who is heading up the project for GFOA. "It's particularly important for small issuers that are not in the market all the time. The small investor does not have as much experience in putting together disclosure."
Jeffrey Green, general counsel of the Port Authority of New York and New Jersey and chairman of GFOA's disclosure task force, called the joint effort "one of the most exciting developments in municipal disclosure since the publication of GFOA's" first edition of its disclosure guidelines.
"The idea of standardizing the formats is really a giant step," said Christopher Taylor, executive director of the Municipal Securities Rulemaking Board. "It's important if down the road secondary market disclosures is going to somehow be successful in this industry. Look at what was done in the housing area as a harbinger of the whole thing."
Since then, most industry groups have either published secondary market disclosure guidelines or are developing them.
But state issuers of hospital bonds hit an impasse earlier this year on whether to issue secondary market standards. John Van Gorkom, president of the National Council of Health Facilities Financing Authorities, was unavailable for comment yesterday.
