Series 7 Exam Prep Underwriting Municipals The Spread

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Process and participants, types of municipal bonds, types of syndicates, participants in the underwriting and components of the spread. • 0:01 Introduction • 1:45 Opening process for underwriting Municipal Bonds • 5:54 Municipal Financial Advisor • 9:20 GOs versus Revenues • Double barrel, Trust Indenture, Coterminous debt, voter approval or no voter approval, flow of funds (net revenue or gross revenue), feasability study, credit enhancement-insurance. • 31:56 Legal opinion done by bond counsel. • 1. Exempt from '33 (Official Statements or OS) • 2. Legislative authority • 3. Federally tax exempt • Unqualified (without reservations) or qualified (with reservations) • 41:10 Municipal Financial advisor role • Negotiated (issuer selects the underwriter) versus competitive (syndicates bid) • 43:16 Notice of Sale in Bond Buyer, notice of sale published in the Bond Buyer • 53:00 Very important answer set • 54:54 Formation and types of Syndicate(s) • Western (divided) or Eastern (undivided) • Winning Syndicate provides issuer with lowest net interest cost (NIC) • Participants: Manager, underwriter, and selling group • 1:06:00 Review of syndicate members. Their roles and operation of the syndicate. • Manager or managing underwriter (member of the syndicate), underwriter (member of the syndicate), selling group (Members of a selling group are not members of the syndicate and are never liable for unsold securities). • 1:08:56 Components of Municipal spread • The spread is the difference between what investor pay and the issuer receives. • Additional takedown plus selling concession equals the total take down. • Take note the additional takedown is NOT an individual component of the spread. • Selling concession is typically the largest individual component of the spread. • Management fee plus additional takedown plus selling concession equals the spread. • Management fee is typically the smallest individual component of the spread. • 1:15:14 Very important answer set • 1:16:35 Another very important answer set

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