Agenda - Council - 02/22/1983 - Laserfiche WebLink

Home

I I S-! LETTER MN Municipality Volume I, Issue 2 February~ 1983 I I I I I I I I I I I I I I I I Bond Registration Due to the efforts of o number of people, including many of you, the lame duck 1982 Congress did pass legislation delaying the effective date of mandatory registration Until July I, 1983. President Reagan signed the bill including the registration delay on January 12th. While nothing is certain when trying to predict future action by the Feds, it does seem unlikely that additional delays in registration will be Considered. As a result it can only be hoped the industry will gear up to permit on efficient movement to registered bonds. For those of you who must issue bonds sometime in 1983 and wish to avoid registration' you should remember that it is the settlement of on issue which must occur before. July !, not the sale date, if the bonds are to be exempt from registration. Since a safe margin between sale and settlement is 30 days, a sale must be held before June Ist to reasonably assure settlement before July Ist. Market Conditions The original January I, 1983 threat of registration did accomplish one thing, it cleared a crowded market, since record numbers of issuers took advantage of lower rates and brought a record volume of bonds to market in November and December, many to avoid registration. The result is a relatively slow calendar of traditional definitive tax-exempts in February. The short-term volume is high however with a number of the State's larger school districts issuing 12 or 13 month tax anticipation certificates. A total volume in excess of $170 million of these certificates is tentatively scheduled for sale by mid- February. Rates for these obligations are ranging from just under 5.00% to 6.50%. Short-term rates generally are down as most of you have experienced with your own reinvestment programs. The bond equivalent yield on f~l-day Treasury bills during the week of January 2b, th was 8.20% compared with 8..50% two months ago and 12.90% one year ago. Long-term rates are up slightly over the past several months. The Bond Buyer's Index on January 28th was ~.~;(;% compared with 9.$~;% one month ago. It was just one year ago that the BB1 hit its all-time record high of The combination of lower rates and a light calendar of pending sales makes this a good time to consider placement of any required mid to long-term financing. We Would be pleased to discuss in more detail with you any questions about a specific program. Advance Refunding A num~ber of you who issued bonds during the very high interest rate market of 1981-1982 have Called about the feasibility of refunding those bonds with new bonds at today's lower rates. Normally under Minnesota law an issue cannot be refunded more than six months before maturity of the issue, or before the first call date, unless the new (refunding) issue meets one of two major requirements. First, the average life of the maturities of the refunding issue must be extended at least five years, or the dollar amount of the interest, including costs of issuance of the refunding bonds, must be at least 5% less than the remaining dollar interest cost of the refunded issue. SPRINGSTED INCORPORATED PUBLIC FINANCE ADVISORS 800 Osborn Building · Saint Paul, MinnesOta 55102 · (612) 222-4241