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Municipal securities can come through the market as a new issue on a competitive or negotiated basis. A competitive underwriting is when broker dealer compete to get bids on a new issue of bonds. The municipal issuer will choose the lowest net total cost to them.
General Obligation bonds are only done on a competitive basis. This is because a G O Bond is backed by tax dollars so the underwriting must be done competitively. Revenue municipal issues can be done negotiated or competitive since their bonds are backed by user revenue and not tax dollars.
Other items involved in an underwriting include:
Notice Of Sale - this is when the municipal issues posts an offering announcement of a bond that is coming out in the future. Broker Dealers will bid on the bonds using this form.
Official statement - This is the prospectus of a municipal issue during the underwriting period. It is the most detailed document regarding the issue. All important information related to the issue will be shown in the official statement.
Muni Bond Investing
Municipal Securities
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