Changes to Federal Disclosure Requirements Affecting Georgia Communities that Issue Municipal Bonds

March 11, 2019

Municipal Securities Rulemaking Board (MSRB)

When states and local communities issue municipal bonds to finance public projects, they generally must disclose to investors important information throughout the life of a bond. This “continuing disclosure” information includes significant financial information, such as the bond issuer’s latest annual financial and operating information, as well as certain financial events, including bond calls, rating changes or bankruptcy, among others. Since late February 2019, issuers of certain municipal bonds have been required to disclose to investors information about significant bank loans and other financial obligations, as well as events reflecting financial difficulties related to those financial obligations.

Municipalities make continuing disclosures to bondholders by filing them with the Electronic Municipal Market Access (EMMA®) website operated by the Municipal Securities Rulemaking Board (MSRB). Below is an overview of what Georgia communities need to know about the changes to their disclosure requirements and filing information with EMMA. For more information, read the MSRB’s resource, 10 Things to Know: Disclosing Financial Obligation Information.

As a result of the U.S. Securities and Exchange Commission’s (SEC) municipal bond disclosure rule, SEC Rule 15c2-12, certain municipal issuers contractually commit to provide investors with continuing disclosures. Communities that issue bonds may also use bank loans and direct placements of securities to finance public projects. Market participants have long sought to enhance transparency in the municipal bond market and give investors insight into financial obligations that could impact an issuer’s ability to repay its bonds, the issuer’s overall creditworthiness, or an existing bondholder’s rights. The SEC has amended Rule 15c2-12 to include disclosure of certain events related to such financial obligations, like the incurrence of significant bank loans. 

When Must Communities Submit New Event Disclosures?
The new disclosure requirements apply if a community issues a bond after February 27, 2019 for which it has agreed to provide continuing disclosures. Disclosure requirements can be triggered by the incurrence of a new material financial obligation, agreements to certain terms of a pre-existing financial obligation or events reflecting financial difficulties related to financial obligation. Issuers should seek guidance from their legal counsel and other advisors regarding disclosure obligations under Rule 15c2-12, including the amendments effective as of February 2019.  

In the interest of transparency, even if a community is not subject to the new requirements, it could still use EMMA to disclose certain financial information related to its financial obligations on a voluntary basis.

How will Issuers Submit Additional Financial Disclosures?
Issuers are able to submit the additional disclosures using the same method they use to submit all continuing disclosure information to EMMA. Read more about the submitting disclosure documents to EMMA here.

Accessing Additional Information
The Municipal Securities Rulemaking Board (MSRB) hosted an educational webinar about the amendments to Rule 15c2-12 and the EMMA submission process on January 17, 2019, with panelists from the SEC, the National Association of Bond Lawyers, the Government Finance Officers Association and Bond Dealers of America. The webinar is available for on-demand viewing on the MSRB’s webinar page.

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