The Official Statement

Municipal bonds are exempt from the registration and prospectus requirements of The Securities Act of 1933. An issuer of municipal bonds is not required to provide investors with any disclosure documents whatsoever. Should the issuer decide to prepare a disclosure document, the issuer will provide investors with the official statement. The official statement will provide investors with all of the details regarding the bonds being issued. Issuers who prepare an official statement must make it available to all purchasers, as well as to any investor or broker dealer who requests one. If the final official statement is not available at the time, a request is made for information. The broker dealer may send the interested party a preliminary official statement. Alternatively, the broker dealer may prepare and forward a summary or an abstract of the official statement. If the issuer decides not to prepare an official statement purchasers must be informed in writing that no official statement will be prepared. 

An official statement includes:

  • The Terms of the Offering
  • Purpose of the Issue
  • Summary
  • Description of Bonds
  • Description of The Issuer
  • Financial Data for The Issuer
  • Regulatory Matters
  • Feasibility Statement
  • Legal Proceedings
  • Type of Indenture (Open / Closed)
  • Authorization of Bonds
  • Security Pledged, if Any
  • Construction Plans
  • Tax Status

All municipal issues offered through negotiated underwritings are required to provide an official statement. The official statement must disclose:

  • The Underwriting Spread
  • The Initial Offering Price For Each Maturity
  • Any Fees Received From The Issuer

Prior to the completion of the transaction, the member must disclose the dealer’s participation in the offering and any control or other relationship issues between the issuer and the underwriter.



Related Articles
  1. Investing

    Basics Of Federal Bond Issues

    Treasuries are considered the safest investments, but they should still be analyzed when issued.
  2. Financial Advisor

    7 Questions to Consider Before Investing in Bonds

    There is a significant number of questions every investor, private or institutional, should consider before investing in bonds.
  3. Investing

    12 Things You Need to Know About Financial Statements

    Discover how to keep score of companies to increase your chances of choosing a winner.
  4. Financial Advisor

    Advising FAs: Explaining Bonds to a Client

    Most of us have borrowed money at some point in our lives, and just as people need money, so do companies and governments. Companies need funds to expand into new markets, while governments need ...
  5. Investing

    Understanding Redemption

    In the investing world, redemption refers to cashing out the value of bonds or mutual funds.
  6. Investing

    Common Bond-Buying Mistakes

    Avoid these errors made daily in bond portfolios everywhere.
  7. Financial Advisor

    How to Find the Best Bets in Muni Bonds

    Approach investing in municipal bonds the same as you would investing in stocks.
  8. Investing

    Why Financial Statements Are Harder to Read Than Ever Before

    Understand four major reasons that financial statements published in 2016 are more complicated and difficult to read than they were in the past.
  9. Investing

    What are Financial Statement Assertions?

    Understand financial statement assertions and what they mean in accounting. For investors, it is important that assertions be accurate.
  10. Investing

    An Insight on the Prospectus of Corporate Bonds

    Making a well-informed decision with respect to buying a corporate bond involves reading the significant facts and details of the prospectus document.
Frequently Asked Questions
  1. How is direct cost margin calculated?

    Find out how to calculate the direct cost margin, including how it is used in corporate finance as an indicator of operational ...
  2. What role does a correspondent bank play in an international transaction?

    Understand what a correspondent bank is and how it operates to facilitate currency exchange and financial transactions between ...
  3. What is the difference between consumer surplus and economic surplus?

    Learn the difference between consumer surplus and economic surplus, how the concepts are related and the important theoretical ...
  4. How much impact does government regulation have on the automotive sector?

    Learn about how government regulation affects the automotive industry in terms of design, safety features, fuel-economy and ...
Trading Center