Archives: Arbitrage

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As the Countdown to the New Issue Price Regulations Continues, Let the Document Negotiations Begin!

The effective date of the new issue price regulations (Regulations) is less than a week away, and because of the need to discuss and plan for application of the new rules with issuers, underwriters and financial advisors for bonds that will be subject to the new rules, we are already gaining experience with documentation relating … Continue Reading

When Should an Issuer of Tax-Advantaged Bonds Use the Hold-the-Offering-Price Method to Establish the Issue Price of the Bonds?

Three score and thirteen years (and one day) after D-Day (June 7, 2017, for the non-history-buffs), the new regulations that prescribe the methods for determining the issue price of tax-advantaged bonds take effect.  Of the various methods for determining the issue price of tax-advantaged bonds, the hold-the-offering-price method is the only one that allows an … Continue Reading

Is the Pendulum of Bond Pricing Beginning to Swing Back Toward Discount Bonds? If So, We Need to Be Prepared for the Resulting Bond Yield Calculations

Premium bonds have been the choice of investors now for many years but is that preference beginning to shift in favor of discount bonds?  Discount bonds are appearing in bond structures with increasing regularity in recent months.  We lawyers leave that question for the underwriters and financial advisors as interest rates turn upward.  However, we … Continue Reading

NABL’s Model Issue Price Certificates – Some Observations

Joel Swearingen reported last week that the National Association of Bond Lawyers (“NABL”) recently released exposure drafts of model issue price certificates that reflect the final Treasury regulations on issue price that take effect for tax-advantaged bonds sold on or after June 7, 2017.  As Joel reported, the model issue price certificates cover the direct … Continue Reading

Model Issue Price Certificates Released

As Alexios wrote about a few weeks ago (here), we are in the middle of a dry spell when it comes to new guidance from the IRS.  Thankfully, the National Association of Bond Lawyers (“NABL”) recently released exposure drafts of several model issue price certificates (see here and here).  The draft certificates are the product … Continue Reading

Report from TSLI – What Can We Expect in the Near Term from the IRS?

Last week I attended the NABL Tax and Securities Law Institute, which always provides valuable insights from representatives of Treasury and the IRS.  Vicky Tsilas, Chief, Branch 5, Financial Institutions and Products, was a panelist for Tax Hot Topics and gave a very interesting status report on the 2016-2017 Guidance Plan (first reported on here … Continue Reading

2016 Year-End Review

Despite an increase in the federal funds rate by the Federal Open Market Committee in December, municipal bond interest rates throughout 2016 were (and still are) extremely low when compared to historic rates.  As a result, the volume of municipal bond issues reached an all-time high in 2016. As discussed below, the Treasury Department released … Continue Reading

The New Issue Price Regulations – “Bought Deals,” Bored Bidders, and Other Problems

As you have heard, and as we noted last week, Treasury and the IRS recently released final regulations that tell issuers how to calculate the “issue price” of tax-advantaged bonds that are issued for money. The regulations don’t take effect until June 7, 2017, so we can spend some time luxuriating in their nuances and … Continue Reading

Final Arbitrage Regulations – The Good and the Not-So-Good Changes to the Working Capital Rules

The 2013 proposed arbitrage regulations included significant changes to the working capital financing rules, including the first rules for long-term working capital financings.  The proposed rules have been finalized in the recently issued final arbitrage regulations (discussed here) (“Final Regulations”), with some changes but without one very significant suggested change.  This post summarizes the important changes that … Continue Reading

Final Arbitrage Regulations Require “Look Through” to a Grantee’s Use of Bond Proceeds: A Big “So What?”

From time to time, issuers will use bond proceeds to make grants to accomplish a governmental purpose. For example, a State bond issuer may make grants to various counties and cities to help with the cost of local transportation improvements. Under the arbitrage regulations (Reg. 1.148-6(d)(4)), the bond proceeds are treated as spent once an issuer … Continue Reading

A Chart Summarizing the Changes in the New Non-Issue Price Arbitrage Regulations

In case you missed it, we prepared a chart comparing the differences between the old arbitrage regulations and the new arbitrage regulations that were released recently. We published it as part of Joel’s comprehensive summary of the new regulations, but here is the chart by itself. The chart shows you the old language and the new … Continue Reading

A Summary of the Final Regulations on Non-Issue Price Arbitrage Restrictions

On July 18, 2016, the Treasury Department published final regulations on non-issue price arbitrage restrictions (the “Final Regulations”) in the Federal Register. The Final Regulations finalize regulations proposed in 2007 and 2013 (collectively, the “Proposed Regulations”).  Click here for a copy of the Final Regulations, and read below for a high-level summary of them.  We … Continue Reading

New Reporting Rules Subject OID on Tax-Exempt Bonds to Information Reporting

Generally, a person that pays interest on a debt to another person must report the amount of interest, usually on IRS Form 1099-INT. In the past, payments of tax-exempt interest did not have to be reported in this way; however, beginning in 2006, the statutory exclusion from information reporting for interest on tax-exempt obligations was … Continue Reading

The Final Allocation and Accounting Regulations – What Do They Mean For “Phantom Investment Proceeds”?

The flexibility to reallocate proceeds to expenditures using an accounting method other than direct tracing has been a well-recognized and much-appreciated opportunity under the allocation and accounting rules of IRC section 141. The former proposed section 141 regulations (REG-140379-02, Sept. 26, 2006) (“Proposed Regulations”), now replaced by the final section 141 regulations issued October 27, … Continue Reading

Hot Topics from the Tax and Securities Law Institute’s Annual Meeting

                Every year, the National Association of Bond Lawyers (“NABL”) hosts the Tax and Securities Law Institute (“TSLI”), which is an advanced conference with various workshops related to pressing issues confronting tax and securities lawyers in the public finance arena.  Essentially, the annual TSLI is like Chrismukkah for tax and securities lawyers.  This year’s meeting … Continue Reading

President’s Budget Proposal – More Bond Stuff

A few weeks ago, Joel began our coverage of the President’s FY 2017 budget proposals [Link] by describing several of the bond proposals.  [Link]  After a short break to talk football among other things (we’ll do whatever it takes to keep you readers coming back!) [Link], we’re back to the budget proposals, this time with … Continue Reading
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