Cindy Mog recently reacquainted us with abusive arbitrage devices, including the factors that evidence overburdening of the tax-exempt bond market (issuing bonds too early, issuing too many bonds, and issuing bonds with an excessive weighted average maturity) and factors that countervail what would otherwise constitute overburdening (bona fide cost underruns, bona fide need to finance … Continue Reading
In Part 1, we introduced the cash flow relief technique/staple of your morning commute known as “Scoop and Chuck.” In particular, we discussed an issuer that will issue new bonds and use the proceeds to pay interest (but no principal) on a prior issue of bonds. The new bonds will have a debt service schedule … Continue Reading
The pandemic is forcing even the most frugal issuers to seek to reduce or postpone their debt repayment requirements. There are many ways to do this. Each approach has pros and cons from a business perspective. Not surprisingly, each approach also has tax consequences that are often not intuitive and sometimes downright devilish. We will … Continue Reading
Yes, The Thing touches everything. COVID-19 affects the muni bond world in some fairly obvious ways. The general mandate is “everybody do less.” Decreasing activity in general translates to decreased business revenues and decreased tax revenues, which means less money available to repay bonds. This has set the disclosure world ablaze, as securities lawyers ponder … Continue Reading
On July 18, 2016, the Treasury Department published final regulations on non-issue price arbitrage restrictions (the “Final Regulations”). A copy of the Final Regulations is available here. Since that time, the mid-afternoon naps of issuers, tax lawyers, and possibly Sean from Portlandia have been improved by reading my “comprehensive” blog post on the Final Regulations. … Continue Reading
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
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
The Bond Buyer recently reported on a warning by Federal Reserve Bank of New York president and chief executive officer William Dudley ($) against borrowing to cover operational deficits. Mr. Dudley distinguished capital borrowings from operational, or working capital, borrowings to illustrate the objective of “matching” the cost and benefits of financed facilities through long-term capital … Continue Reading
