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What is Continuing Disclosure?

Continuing disclosure consists of important information about a municipal bond that arises after the initial issuance of the bond. This information generally would reflect the financial or operating condition of the issuer as it changes over time, as well as specific events occurring after issuance that can have an impact on the ability of issuer to pay amounts owing on the bond, the value of the bond if it is bought or sold prior to its maturity, the timing of repayment of principal, and other key features of the bond. Each bond will have its own unique set of continuing disclosures, and not all types of continuing disclosures will apply to every bond.

The MSRB’s Electronic Municipal Market Access (EMMA) website publicly displays continuing disclosures that are provided either as required disclosures by municipal issuers and other parties known as “obligated persons” or “obligors” under contractual agreements entered into under Rule 15c2-12 of the Securities Exchange Act of 1934 (Exchange Act) or as voluntary disclosures by issuers and obligated persons without a contractual obligation to do so. As noted above, these disclosures generally are divided between submissions made to update financial or operating information about the issuer and notices that disclose the occurrence of specific events that may have an impact on the bonds. These disclosures are described below.

  • Rule 15c2-12 Disclosures

    Rule 15c2-12 rule requires, for most new offerings of municipal securities, that the following types of information be provided to the MSRB’s EMMA system:

    Financial or operational information
    • annual financial information concerning issuers or other obligated persons, or other financial information and operating data provided by issuers or other obligated persons; and
    • audited financial statements for issuers or other obligated persons, if available.
    Event notices
    • principal and interest payment delinquencies;
    • non-payment related defaults, if material;
    • unscheduled draws on debt service reserves reflecting financial difficulties;
    • unscheduled draws on credit enhancements reflecting financial difficulties;
    • substitution of credit or liquidity providers, or their failure to perform;
    • adverse tax opinions, Internal Revenue Service (IRS) notices or events affecting the tax status of the security;
    • modifications to rights of security holders, if material;
    • bond calls, if material;
    • tender offers;
    • defeasances;
    • release, substitution, or sale of property securing repayment of the securities, if material;
    • rating changes;
    • bankruptcy, insolvency, receivership or similar event;
    • merger, consolidation, or acquisition, if material; and appointment of a successor or additional trustee, or the change of name of a trustee, if material; and
    • notices of failures to provide annual financial information on or before the date specified in the written agreement.

    Continuing disclosure information generally is not provided for an issue where the size of the issue is $1 million or less; where bonds are sold to investors in units of no smaller than $100,000 ($100,000 minimum denomination) and are sold to no more than 35 "sophisticated" investors; where bonds are sold in $100,000 minimum denomination and mature in nine months or less from initial issuance; or where bonds were sold prior to December 1, 2010 in $100,000 minimum denomination and the bond owners can require the issuer to purchase back the bonds at face value every nine months or more frequently (demand securities). For demand securities issued on or after December 1, 2010, and for previously-issued demand securities that undergo certain conversions in interest-rate mode on or after December 1, 2010, continuing disclosure agreements will be entered into under Rule 15c2-12 that will require provision of continuing disclosures to EMMA for such demand securities. Read Rule 15c2-12.

  • Voluntary Disclosures

    Some issuers and obligated persons provide additional items of information after the initial issuance, either under contractual arrangements or as a matter of practice. EMMA will display any of the following additional categories of continuing disclosure if submitted by an issuer or obligated person:

    Additional financial or operation information, including:
    • quarterly/monthly financial information;
    • timing of annual disclosure (120/150 days);
    • change in fiscal year/timing of annual disclosure;
    • accounting standard (GAAP-GASB/FASB);
    • change in accounting standard;
    • interim/additional financial information/operating data;
    • budget;
    • investment/debt/financial policy; and
    • material provided to rating agency or credit/liquidity provider;
    • consultant reports; and
    • other financial/operating data.
    Additional event-based disclosures, including:
    • amendment to continuing disclosure undertaking;
    • change in obligated person;
    • notice to investors pursuant to bond documents;
    • certain communications from the IRS (other than those included under Rule 15c2-12);
    • bid for auction rate or other securities;
    • capital or other financing plan;
    • litigation/enforcement action;
    • change of tender agent, remarketing agent, or other on-going party;
    • derivative or other similar transaction; and
    • other event-based disclosures.