This is the first post of a two-part series.
Recently, a significant municipal issuer entered the market with its first sale under a $1 billion borrowing program that will use an offering statement style novel to the municipal market. For years, issuers of traditional corporate securities have used shelf registration for their securities. Shelf registration is a registration of a “new issue” which can be prepared up to two years in advance of the date on which the securities are actually issued and sold, so that the issue can be offered quickly as soon as funds are needed or market conditions are favorable.
There are several ways in which municipal securities issuers and conduit borrowers (including hospitals and health care systems) can implement a similar process to facilitate flexibility in the issuance of municipal securities, particularly during a turbulent market environment. So what are the benefits of such a process? What requirements would need to be considered in order for an issuer or conduit borrower to satisfy federal income tax laws and federal securities laws and standards applicable to the issuance of tax-exempt municipal securities? We’ll explore those questions and more in our two-part blog series.
Regulatory and Contractual Considerations
Although a “shelf registration” approach to disclosure may have substantial utility for certain borrowers (including hospitals and health care systems), there are a number of important issues that should be considered when setting such a program up. Set forth below are summaries of certain regulatory and contractual issues. In Part 2 of this blog, we will address considerations relating to implementation of such a program.
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